Introduction

In 2020, the total expenditure of the Korean government was ₩547 trillion, and a substantial share of this public funding (18.3 per cent) was transferred to 360 agencies outside the government in the form or grants or subsidies. These agencies are public institutions, which are typically responsible for providing certain public goods and services on behalf of governments at different levels but in a more specialised manner. Public institutions are not strictly central or local subordinate agencies of the government but are subject to government oversight and control. It is because they are partially funded by the government and the policy outcomes they (semi-) monopolistically provide are crucial for the public (KIDF, 2011; Choi and Hong, 2017). The unique nature of public institutions raises the issue of how they can be held accountable in terms of whether their outputs and outcomes efficiently utilise public resources, meet social expectations (which are often at odds with organisational efficiency) and fulfil the policy agenda of the government that funds them.

The primary role of public institutions is to uphold the public benefit by providing crucial services to the public. For example, the services provided by public enterprises include utilities (electricity, water, gas, transportation) and broadcasting services. These services are capital-intensive and entail high initial set-up costs, which function as barriers to entry for alternative service providers. These services are likely to become monopolies if provided by the private sector. On the other hand, public enterprises promote benefits for the public by limiting their own organisational profits. Public institutions are also responsible for services with a public nature and marginal profits that the private sector seldom performs. For example, the private market is not suited to services related to cultural heritage, research and development (R&D), or pension management, which are associated with non-profit values and should be managed in the long run.

The purpose of this chapter is to provide a brief overview of the performance evaluation system for public institutions. The following sections discuss a typology that classifies public institutions and their responsibilities with regard to service type, as well as a detailed examination of the components of the performance evaluation system.