Rethinking New Public Management Delivery Forms and Efficiency: Long–Term Effects in Spanish Local Government

With the increase in public services offered at the local level and heightened budgetary and financial constraints on local government, new ways of managing local public services must be sought, in order to maximize the efficiency of resource management. Accordingly, local governments have introduced organizational changes, through contracting out, the creation of public agencies, and increased cooperation with other municipalities and private companies. However, previous studies have only examined the relationship between contracting out and efficiency, and no in-depth survey has been made of the relationship between efficiency with other forms of management, nor of the joint impact of these forms of management on efficiency. The main aim of this study is to determine whether New Public Management (NPM) delivery forms do in fact improve the efficiency of Spanish local governments. In this regard, we analyze the particular impact of the global recession. Our results suggest that in general terms the creation of agencies, contracting out, and intermunicipal cooperation reduce cost efficiency. However, these results also lead to the conclusion that during the global recession, some of these NPM delivery forms tended to become more efficient. Thus, empirical evidence suggests that the adoption of mixed firms contributes to higher levels of cost efficiency in the whole period considered, and thus it may be a suitable instrument in periods of crisis.