COMPETITION OR MONOPOLY? COMPARING PRIVATIZATION OF LOCAL PUBLIC SERVICES IN THE US AND SPAIN

Differences in national traditions of public intervention, institutional arrangements and public service markets make local public services an area of great diversity. In this paper we undertake a comparative study of how local governments arrange for delivery of water and waste services in the US and Spain. We find levels of privatization are higher in Spain than in the US. We review organizational reform in the two contexts and compare service delivery data using national surveys from each country. We find lower and less stable privatization in the US stems in part from adherence to public choice emphasis on the benefits of market competition over public monopoly. By contrast, Spanish municipalities reflect an industrial organization approach, and create hybrid public/private firms which benefit from both market engagement and economies of scale available under monopoly production. We conclude that managing monopoly may be more important than competition in local service delivery.     

Population size or population density? An empirical examination of scale economies in South Australian local government, 2015/16

ABSTRACT

Advocates of amalgamation typically claim that substantial scale economies flow from municipal mergers, which generate larger local government entities by population size. We examined whether economies of scale exist in council outlays by analysing the expenditure of 68 South Australian local government areas using data from the 2015/16 financial year. However, given the correlation between population size and population density it is important to determine whether the influence of population size on expenditure is due to variations in population density. We find that when local government areas are stratified into subgroups on the basis of population density, the evidence of economies of scale largely evaporates. From a policy perspective, this suggests that in place of municipal mergers, policymakers should instead explore avenues for shared service arrangements in those functions which exhibit scale economies.     

DISCUSSION - Agricultural Policy Reform and Rural Livelihoods in Central Mexico

This contribution examines the impact of profound changes to agricultural policy implemented since 1988 on the livelihoods of Mexico's rural population. Detailed studies in four villages show that rural incomes are very unevenly distributed within communities leaving half of households in poverty. During the last decade key factors affecting village economies have been international and national, rather than specific changes to farm policy. Most changes have been to the detriment of the communities studied, but peasant households have adapted and survived, at a price. If the worst fears about the consequences of economic liberalisation have not been realised, neither have the hopes. Depressed markets for basic goods and services have limited the growth of the rural economy. Private investment and provision of services have not been stimulated.     

From ‘trial and error’ to major reform: The politics of Medicare demonstration projects

Facing fragmented institutions and partisan polarization, officials in the United States often attempt to engineer policy change without assembling new legislative majorities. To this end, they have increasingly employed demonstration projects, policy innovations undertaken by administrative agencies designed to test alternative approaches to implementation or service delivery on a limited segment of the target population and for a limited period of time. Despite the increasing importance of demonstration projects, they are an undertheorized source of policy change. In this article, we conceptualize demonstration projects as part of a class of experimental institutions that, while incremental in scope, have the potential to ‘scale up’ into more substantial reforms. Data from three Medicare demonstrations suggest that policy change is more likely when programmes generate strong support constituencies; minimize administrative and infrastructural costs; are undertaken in contexts with few veto points; and align with the time horizons of elected officials.     

Compulsory Competitive Tendering And Local Government Financial Services: An Analysis Of The Views Of Local Government Accountants In The North West Of England

Between 1979 and 1997, successive Conservative governments sought to reduce the scale of public sector activity and to introduce competition in the provision of public sector services. A central feature of this policy was the introduction of compulsory competitive tendering (CCT). CCT was initially confined to blue collar services but, by means of the Local Government Act 1992, it was extended to white collar, professional services, including financial services. However, though potentially extremely significant, the support for and implications of such a policy are issues which have been inadequately researched. Because of this, research has been under-taken into financial services CCT and has included a questionnaire survey of 300 professionally qualified accountants employed in 17 local authorities in the North West of England, drawn from county councils, district councils and metropolitan authorities. The article presents the findings of the survey, with a particular focus on the views of accountants on CCT in general and financial services CCT in particular. In addition, it provides evidence that the CCT process, irrespective of views on CCT and its appropriateness for specific activities, has changed culture and attitudes in the case of local government finance professionals.     

The Guardian State and its Economic Development Model

Abstract

This article outlines the core features of a particular, resource-led development model, the oil-rich guardian state. Its key distinguishing feature from other resource-rich economies consists in its strong economic welfare objective function, which in line with its exceptional oil wealth renders its population amongst the wealthiest nations in the world. However, the guardian state also illustrates some of the negative externalities associated with resource wealth, namely the policy dilemma of directing seemingly abundant financial resources into the economy. The state faces a high propensity for waste, and for the systemic dilution of market incentives, thereby rendering sustained and self-generating economic growth more difficult than in less resource-rich economies.     

Notes on Contributors

This article draws from a major research project examining the impact of various forms of municipal consolidation in Australia and New Zealand. Its wide-ranging research involved studies of 15 cases of different forms of consolidation, including amalgamation, together with a series of interviews with senior practitioners from the local government sector. Data revealed little evidence of consistent economies of scale from consolidation, however both case studies and interviews indicated that consolidation generated economies of scope and what may be termed ‘strategic capacity’. While it was not possible to disaggregate the data for particular sizes of local authority, enhancement of strategic capacity was more obvious through processes of consolidation in larger ones and less so in smaller, more remote ones.     

Scale economies in local public administration

A renewed interest in decentralisation has profoundly affected local public governance around the world. Faced with an increasing number of tasks, Dutch municipalities have recently sought physical centralisation, merging into larger jurisdictions in order to target new policy areas more effectively and cost efficiently. Is such a policy of physical centralisation wise? We study economies of scale in local public administration, and find – given transfer payments from central government and current cooperation between municipalities and after controlling for geographical, demographic and socioeconomic variables – substantial unused scale economies of 17% for the average municipality. Between 2005 and 2014 the optimum size of municipalities increases from around 49,000 to 66,260 inhabitants, pointing at an increased importance of fixed costs relative to variable costs in local public administration.     

Being poor,feeling poorer: Combining objective and subjective measures of welfare in Albania

Abstract

In this paper we investigate how combining objective and subjective measures of welfare can enrich traditional poverty profiles by exploring the relationship between these welfare measures, and examining what explains the differences between the two. One important finding of our analysis (using data for Albania) is that reconciling subjective and objective poverty profiles suggests the presence of sizable economies of scale. This result calls for increased attention to the proper estimation of a scale parameter for poverty analysis, as changes in assumptions on economies of size and adult equivalence scales are likely to produce significant changes in the analysis of poverty and its distribution across households and individuals.     

Territorial Boundaries as Limits: A Foucauldian Analysis of the Agglomeration of Municipalities

Public management theories have focused scholars' attention on agglomeration processes between public administrations. Such processes are relevant at a local level to increase efficiency and effectiveness in the provision of public services. Scholars and practitioners have pointed out economies of scale and efficiency in the production of public services as the most important incentives for adopting agglomeration policies.

All kinds of related discourse, such as that relating to economics for example, need to be coordinated in order to change the behaviour of citizens and make the agglomeration process acceptable. The present article adopts a Foucauldian approach in highlighting an additional variable/discourse in addition to all the others used to foster agglomeration processes: the identity and culture of the communities involved in this kind of process.     

Old wine in new bottles? The Commission and the use of environmental policy instruments

In this article, we address two main questions. First, we ask whether the alleged shift in the Commission's environmental 'policy style' from a traditional regulatory style towards a new style based on less impositional, more market-based and co-operative instruments has actually occurred in practice. We seek to answer this question (a) by employing content analysis to assess the policy instruments propagated by the Commission in both the Fourth and Fifth Environmental Action Programmes (EAP); and (b) by analysing legislative proposals introduced by the Commission in designated environmental policy fields (atmospheric pollution, waste, water). On the basis of the findings we argue that there is a discrepancy between what the Commission declares in the EAPs and what it proposes in practice. Moreover, in a second step, we highlight the factors which might make any major shift in the Commission's policy style difficult to achieve in order to account for this discrepancy.     

Co‐operation and the urban environment: An exploration

Many urban environmental problems (such as littering of streets) arise from the open access character of the resource concerned and can be analysed in the framework of co‐operation. Studies in the context of rural commons have indicated that though seeming to be violating a narrow definition of rationality, people do cooperate. This paper attempts to explore some issues in the context of the urban environment, focusing on solid waste management in Madras, India, and a co‐operation based institution called Exnora. A number of hypotheses on the conditions affecting co‐operation are examined. While group size may be relevant for costs, it does not have any impact on co‐operation. The management style of committees and economies of scope seem to be important.     

SIMILAR PROBLEMS,DIFFERENT SOLUTIONS: COMPARING REFUSE COLLECTION IN THE NETHERLANDS AND SPAIN

Because of differences in institutional arrangements, public service markets, and national traditions regarding government intervention, local public service provision can vary greatly. In this paper we compare the procedures adopted by the local governments of The Netherlands and Spain in arranging for the provision of solid waste collection. We find that Spain faces a problem of consolidation, opting more frequently to implement policies of privatization and cooperation, at the expense of competition. By contrast, The Netherlands, which has larger municipalities on average, resorts somewhat less to privatization and cooperation, and more to competition. Both options—cooperation and competition—have their merits when striving to strike a balance between transaction costs and scale economies. The choices made in organizational reform seem to be related to several factors, among which the nature of the political system and the size of municipalities appear to be relevant.     

Contracting Out Parks and Recreation Services: Correcting for Selection Bias Using a Heckman Selection Model

Despite the growing scholarly attention on the efficiency rationale of contracting out, the empirical evidence to support claims that contracting out service delivery reduces service costs has not been forthcoming. Using transaction cost theories, this research explores park and recreation service provision costs across contractor sectors, controlling for the choice to contract out a service or not. The two-stage Heckman model indicates the importance of competitive markets and economies of scale in reducing transaction cost risk which local governments must face. This research also addresses how state and local institutional settings define the context in which policy decisions are made and implemented.     

Regional push: Towards a geography of development and growth in lowand middle-income countries

Regional push derives from the geographic agglomeration of economic activities, and is expressed in increments to national productivity. Various pieces of statistical evidence in favour of the existence of regional push effects in low- and middle-income economies are marshalled. The origins of these effects in different sorts of externalities and increasing returns to agglomerative scale and scope are analysed in theoretical terms. Further evidence for the existence of these effects is displayed in a brief review of published case studies of African, Asian, and Latin American regions. A number of observations are then offered on the possibilities of identifying viable developmental policies and practices directed to enhancing the productivity-boosting properties of regions in low- and middle-income economies.     

'Out Of Sight, Out Of Mind': Assessing The Impact Of Markets For Children's Residential Care

This article is concerned with assessing the effectiveness of markets for complex professional services in social care. The issue is explored through an account of developments in the children's residential care sector. Over the past five years there has been a steady expansion in the role of external markets in this area. However, this was not required by the Children Act 1989 and has become the subject of considerable debate between policy makers and practitioners. While some favour an extension of choice, others argue that a further decline in local authority run provision will be both costly and detrimental in terms of meeting key policy goals. In order to assess these claims, reference is made to the findings of a study of purchasing practices for children's residential care in twelve local authorities in England and Wales. The impact of the emerging market is analysed along two dimensions. Firstly, we assess how far it is operating efficiently, concentrating on market structure, information and transaction costs. Secondly, attention is given to the impact of market changes on the policy objectives of: localized placements; ensuring adequate safeguards; and matching needs and services. The results reveal that there have been significant costs associated with markets in children's services. In a context of government efforts to promote modes of service delivery on the basis of 'what works', these difficulties have certain implications. Not only do they draw attention to the need for greater collaboration between purchasers and providers, they also point to the continued relevance and usefulness of local authority managed provision.     

Recent trends in the evolution of Mexican financial groups

The collapse of the peso in late 1994 shocked the world financial community and severely tarnished Mexico's image as a “model” developing country. This event, however, would not have been so surprising if, in the post-NAFTA euphoria, greater attention had been given to substantive deficiencies in Mexico's commercial environment which contradicted the form of its modernization programs. An example of this phenomenon may be found in the 1990 promulgation of the Law to Regulate Financial Groups . The official purpose of the law was to foment the formation of large conglomerations of financial services firms, similar to the universal banks found in Germany, which could offer a variety of financial services under a common trademark and take advantage of economies of scale. The government hailed the law as a step toward enhancing the international competitiveness of Mexico's financial system. However, in substance, the law resembles two laws passed in the 1970s which preceded the 1980s financial crisis. Given this contradictory perspective, this paper examines the history and legal basis of Mexican financial groups as well as the evolution of financial groups from 1991 through 1994.     

Assessing Small and Medium Forest Enterprises' Access to Microfinance: Case Studies from The Gambia

Small and medium forest enterprises (SMFEs) are commonplace in many developing economies. SMFEs often face several challenges, with access to finance frequently being cited as a key hurdle. This study aimed to evaluate the access that SMFEs in The Gambia have to microfinance, and to determine strategies for improving the delivery of these services. Data show that most SMFEs have decent access to deposit accounts, but limited access to credit. While cooperative credit unions and other non-financial institutions have been providing microloans to SMFEs, access to such financial services could be improved. Six strategies to do so are proposed.     

What have we learned from the last three decades of empirical studies on factors driving local privatisation?

Scholarly empirical studies on factors that motivate local privatisation have greatly grown in the last decade. As well, having available better and more comprehensive databases and using more refined empirical techniques have made possible to enhance our understanding of the dynamics of local privatisation, particularly in many European countries. The influence of fiscal stress, cost considerations – scale economies as well as transaction costs – and political partisan interests is usually confirmed. Furthermore, ideological attitudes appear to be more influential than they seemed to be, particularly when considering social services, rather than the technical ones.     

What Drives Japanese INGOs to Operate in Latin American Countries?

International nongovernmental organizations (INGOs) provide essential aid and public services to less-developed countries. Although most literature focuses on Western INGOs, Asian INGOs have also become globally active. Little is known about what motivates INGOs to provide services in other regions, such as Latin America. In this study, we seek to identify the criteria Japanese INGOs use to select Latin American recipient countries. We propose that Japanese INGO operational location decisions are a function of Japanese foreign policy agenda, Japan-recipient country business relations, and recipient country’s need and liberalization. Using data from Japanese INGOs working in Latin America and 24 Latin American countries on contextual, macroeconomic, and demographic indicators, we find that the significant factors driving INGO decisions to operate in Latin American countries are need and the presence of Japanese businesses in the recipient country. Results have practical implications for foreign aid targeting and economic development.