From Central Planning to Performance Contracts, New Public Management in Mongolia, 1996-2009


In 1996, Mongolia’s newly elected government, led by a group of market-oriented politicians, decided to reform civil service on the New Zealand New Public Management model, which required managers to sign contracts promising results in exchange for freedom to spend their budgets as they chose. The reforms were intended to modernize a civil service that, while legally changed since democratization in 1990, retained many of the characteristics, and staff, of the previous Soviet-modeled system. Reformers confronted a lack of robust accountability procedures, salary arrears and a lack of central control over local expenditures. The Democratic Coalition government, led by an economic team strongly committed to market-oriented reforms, settled on the contract-based New Public Management model as a way of preserving agency-level decentralization while making agencies’ managers directly accountable to the national government. When enacted, the system met with difficulty at every stage: in specifying outputs for agencies and individuals, in measuring performance, and in rewarding good performance. By 2009, thirteen years after the reforms started, officials reported that the contracts remained largely a formality.

David Hausman wrote this case study based on interviews conducted in Ulaanbaatar, Mongolia, in December 2009. 

Associated Interview(s):  Mendsaikhany Enkhsaikhan

performance management
pay reform
New Public Management
civil service
Focus Area(s)
Civil Service
Critical Tasks
Evaluating performance
Inter-ministerial coordination
Job descriptions
Performance management system
Salary structure reform
Sequencing reform
Core Challenge
Contracting out (creating semi-autonomous agencies)
Country of Reform
Case Studies
David Hausman