Democratic vs. efficiency: how to achieve balance in times of financial crisis

Abstract

Public administration is forced to strike a balance between efficiency and democracy in defining its agenda and course of action. One of the characteristics of public administration is that all decisions must reflect democratic values, in addition to being efficient. Nevertheless, administrative reform, motivated by financial stress, tends to highlight the importance of financial performance whilst overlooking the democratic and political aspects of public management. This research seeks to analyze the link and tension between efficiency and democracy in light of the latest global financial crisis. The research uses a quantitative approach and collects data from Portuguese local governments to test the argument of an inverse linear relationship between financial performance and democratic procedures. Findings confirm Waldo’s argument (1948) of an inverse relationship while the evidence gathered shows that the financial crisis increased the negative effect of democratic procedures on financial performance.