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The debate on new governance was triggered largely by the growing recognition that policy making process needs to go beyond the public sector to incorporate private sector and nongovernmental actors to achieve a set of objectives (Brinkerhoff, 1996; Forrest, 2003). This, in turn, was necessitated by the poor track records of public institutions and traditional “governance” which emphasized public policy process as centrally steered and managed through direct control, which Osborne and Gaebler (1992) describe as “bloated, wasteful, and ineffective” and by increasing complexity of public problems. The growing distinction between government and governance comes at a time when the public sector is being burdened with a vast heterogeneity of functions, organizational forms and modes of governance over the years, mostly in responses to growing social and economic problems (Kooiman, 1993). Whatever forces were behind changes, both central governments and local municipalities witnessed roles change dramatically which had impact on ways in which policies are derived and implemented. Peters and Pierre (1998) say that “the idea that national governments are the major actors in public policy...appears to be in doubt.” The European literature has also characterized the diminishing capacity of the state as “governance without government (Rhodes, 1997)” while other 19 © International Review of Public Administration 2006, Vol. 11, No. 1