The Third Way economics strategy places great emphasis upon enhancing the supply-side of the economy. In the previous chapter, the utilisation of active labour market policy, combined with initiatives designed to increase the flexibility of the labour market, were examined in terms of their contribution towards their impact upon reducing unemployment. This would be achieved through shifting the supply-side determined long run equilibrium rate of unemployment to the right, together with their ability to attract FDI and thereby enhance technologically advanced production. In contrast, this chapter concentrates upon a second variant of supply-side policy, notably one targeted upon reform to the public sector in general, and specifically to the welfare state. This includes the introduction of New Public Management (NPM) techniques into public service provision, complete with a greater emphasis placed upon contracting, instituting a purchaser-provider split, strategic management and the introduction of quasi-marketisation as a mechanism to introduce competition and deliver structural change.
KeywordsPublic Sector Welfare State Public Expenditure Economic Growth Rate Social Democrat
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