Marketization Models in Germany

Competitive powers have increased in the public sector of Germany over the last decade. This has been caused by the worldwide mainstream of neoliberal thinking and NPM. Two major forms of competition can be observed – non-market/quasi-market competition and the market competition. Related activities which fall under these two types of competition follow a number of trends.

One trend is the autonomization and corporatization of public entities, particularly at the local level. Over the past 20 years, more governmental units such as schools, hospitals, cultural organization, infrastructure, water or energy, maintenance and cleaning have moved from being an integral part of the Government toward a more autonomous status. The objective was to gain separate legal status and be able to enter the market.

Another trend is the benchmarking or performance measurement activity in the German public sector, predominantly at the local level. The aim was to establish a set of performance indicators that are related to the different products / services of the local bureaucracies. Such indicators are important such that in the absence of market competition, local governments compete on the basis of the set standard of performance and they are evaluated on the basis of these indicators. It is this kind of "competition by benchmarking" when public sector reformers in Germany speak about competition.

The introduction of internal markets into public sector organizations is another trend that has emerged in Germany. This model proposes a service level agreement between internal service units within a government agency. It is presumed that both the provider and the providee will negotiate on the terms and fees in the delivery of a service thereby simulating a market within the organization. This is what is referred to as "internal market."