Responsive regulation in public‐private partnerships: Between deterrence and persuasion

Design‐Build‐Finance‐Maintain‐Operate (DBFMO) contracts are a particular type of public‐private partnership whereby governments transfer the responsibility for the design, construction, financing, maintenance, and operation of a public infrastructure or utility service building to a multi‐headed private consortium through a long‐term performance contract. These arrangements present a typical principal‐agent problem because they incorporate a “carrot and stick” approach in which the agent (consortium) has to fulfill the expectations of the principal (procurer). This article deals with a neglected aspect in the literature related to the actual use of “the sticks or sanctions” in DBFMOs and assesses to what extent and under which conditions contract managers adopt a deterrence‐based enforcement approach or switch to a persuasion‐based approach, specifically when the contract clauses require the use of (automatic) deterrence. An empirical analysis of four DBFMOs in the Netherlands shows that the continuation of service delivery, the need to build trust, and the lack of agreement on output specifications play a role in the willingness of the procurer to apply a more responsive behavior that uses persuasion, even when deterrence should be automatically applied. © 2016 John Wiley & Sons Australia, Ltd     

Identification of critical success factors for public–private partnership projects

Public–private partnership (PPP) is one of the popular mechanisms for the development of infrastructure worldwide; governments across the globe are engaged in discovering a range of PPP policies and strategies for growth of infrastructure. The growth of infrastructure is imperative of the sustainable development of an economy. Therefore, it is pertinent to identify key success factors for the development of infrastructure through PPP model. The current paper aims to explore significant factors for successful execution and completion of PPP projects in infrastructure. A total of 517 employees who had hand‐on experience on PPP projects located in India were interviewed through a structured questionnaire. Exploratory factor analysis yielded 14 components as a significant factor for the success of PPP in infrastructure. This study highlights that the development of infrastructure would be rapid through PPP if government considers these factors in the implementation phase.     

Hybrid annuity model: Hamming risk allocations in Indian highway public–private partnerships

A new public–private partnership (PPP) model, that is, hybrid annuity model (HAM) was introduced in 2016, to revive investments in the Indian highway infrastructure and to remedy the troubled relationship between the public and private sectors. This model marked a significant policy departure in the management of long‐ and short‐term public interest, which is inherent to public utilities and service delivery. Through a dispassionate lens, this paper critically examines the extent to which HAM has fulfilled its stated objectives. The analysis of project award data provides mixed empirical evidence of HAM's early success. As a positive policy imperative, HAM has been able to attract private participation in highway infrastructure by readjustment of risk allocations, and hence, it is a welcome step forward in improving public affairs. Worryingly though, HAM also brought about extensive de‐risking of the private sector, with evidence of rendering risk retention, that is, “skin‐in‐the‐game” by the less significant private infrastructure investors, and thereby adversely impacting development priorities. We find that HAM has taken the reengagement of private sector two steps back in management of PPP affairs. Recognizing that a true performance assessment is unlikely at this early stage of HAM introduction, the paper adopts a more analytical stance in identifying possible pitfalls based upon the telltale signs presented by project bidding and award data. This study offers fresh insight and course correction on the role of government and other stakeholders in this newly introduced PPP template.     

Governing public–private partnerships: A systematic review of case study literature

Governance plays a critical role in determining the success and failure of public–private partnerships (PPPs). We conducted a systematic review of case study literature on PPP governance and developed a governance framework consisting of 21 issues in four groups: institutional, organizational, contractual, and managerial. Then, we investigate the dynamics of governance issues, including the relative importance, interrelationships, and connections with PPP success and failure. Results suggest that PPPs should emphasize cooperation, trust, communication, capability, risk allocation and sharing, competition, and transparency in their governance. We also found that the governance practice of emphasizing dominant and direct factors and ignoring recessive and indirect ones has hindered PPPs’ success.     

Partnering to beckon them home: public‐sector innovation for diaspora foreign investment promotion

This article examines a little‐studied component of public administration existing in most countries around the world and particularly important for developing countries: national investment promotion agencies (IPAs). Diasporas are an increasingly important and relatively untapped resource for development and many homeland governments view diaspora foreign investment as key to their economic development. In addition to being generally under‐resourced, many IPAs struggle to identify ways to effectively target, cultivate and facilitate diaspora homeland investment (DHI). To accomplish these goals, these public‐sector entities are beginning to identify and leverage key partnerships in the NGO sector. We describe the services IPAs offer and enumerate the challenges they face associated with DHI. Drawing on three illustrations of IPA–NGO partnerships, we develop preliminary tools for identifying and designing partnerships for the purpose of promoting DHI based on their scope, function and degree of formality. Copyright © 2007 John Wiley & Sons, Ltd.     

The political cost of public–private partnerships: Theory and evidence from Colombian infrastructure development

Infrastructure public–private partnerships (PPPs) eschew traditional public management to provide distributive goods worldwide. Yet, in Colombia, the context of our study, both the promise of and voters' experience with PPPs hinder incumbent parties in elections when theories of distributive politics expect otherwise. We argue that negative experiences with PPPs introduce a sociotropic turn in individual voting: bad experience crowds out the possibility that promising a new project will improve a voter's own welfare. Studying what are, to our knowledge, all 109 Colombian PPP projects between 1998 and 2014, and over 8,700 individual survey responses, our evidence shows that vote intention for the incumbent executive or his party decreases as experience with more PPPs in respondents' districts increases. Our analysis and results introduce an important agenda for research into the political significance of these legacies of new public management.     

Public sector versus private sector: the case of Uganda

The article reviews the case for privatization in Africa, with special reference to Uganda. It argues that enterprises supplying goods and services other than infrastructure are best left to the private sector, but considers the relative merits of local performance contracts to expatriate management contracts. (© 1997 by John Wiley & Sons, Ltd.)     

Madhya Pradesh Housing & Infrastructure Development Board: affordable housing via public–private partnership mode

The Madhya Pradesh Housing & Infrastructure Development Board (MPHIDB) is a state‐owned entity in Madhya Pradesh State of India with the mandate of providing housing for citizens, particularly for those in the low‐income segment. MPHIDB has been constructing houses on its own using the traditional engineering and procurement contract (EPC) model. In July 2015, it was exploring the possibility of creating affordable housing units via public–private partnership (PPP). The advantage of involving private sector is that MPHIDB can tap into creative energy and construction efficiency of the private sector and deliver the best results within the given set of time and resource constraints. The proposed structure of PPP is that the private partner will be given a portion of land in lieu of the affordable housing units that it will build and transfer to MPHIDB. However, there are trade‐offs involved in doing the project in PPP mode instead of EPC mode. The main advantages of a government body like MPHDIB doing the project on its own are as follows: (a) It is able to better manage regulatory risks in terms of getting clearances, land acquisition, and so forth; (b) it can raise finances at lower interest rates than what is charged for private sector entities; and (c) the entire land parcel is available to construct houses, and hence it can get more housing units per unit of land. The Commissioner (CEO) of MPHIDB had to decide whether to go for PPP or EPC model, and if he opted for PPP, how should the PPP be structured?     

Getting the fundamentals wrong: woes of public–private partnerships in solid waste collection in three Ghanaian cities

Until over a decade ago, concerted efforts at involving private agents to deliver solid waste collection services did not feature in local government's (LG's) policies and practices in Ghana. The LGs had over the years directly delivered the services with their labour, materials and equipment. The purpose of entering into partnerships with private contractors was to improve service delivery. This comes at a time when the private sector is generally viewed as more efficient and effective than the public sector. There is abundant literature on potential benefits of private sector participation in public service delivery; yet, figures of efficiency gains are often accepted without challenge. More advantages but fewer disadvantages are cited and anecdotal evidence is used only to illustrate successful applications of the concept of public–private partnerships (PPPs). Using research data from three cities (Accra, Kumasi and Tema) in Ghana, this article exposes the contrast between policy expectations and outcomes of PPPs. The article argues that simply turning over public service delivery to private agents without ensuring that the fundamentals that make them successful are put in place leads to a worse situation than portrayed in literature about the benefit of PPPs. Copyright © 2004 John Wiley & Sons, Ltd.     

When new public management fails: Infrastructure public–private partnerships and political constraints in developing and transitional economies

Amidst calls for more scrutiny of the failure of infrastructure public–private partnerships (PPPs), uncertainty about how we can measure failure remains, and little systematic evidence illuminates its likelihood. Our mixed‐methods design explores the notion of failure and identifies the conditions under which it happens. The first phase of our research employs documentary analysis and semistructured expert interviews, and identifies project cancellation as capturing the most severe occurrences of failure. A second phase statistically analyzes a unique World Bank data set capturing the provisions of over 4,000 infrastructure PPPs launched between 1990 and 2015 in 89 countries. We find robust evidence supporting the theoretical claim that PPPs are less likely to be canceled in countries with more veto points among their political institutions to restrain politicians from intervening in policy implementation. Cancellation is a rare, but valid indicator of failure, and the importance of veto players clarifies how political risk operates in this context.     

Deteriorating public and private sector relations in Central America

The Central American countries are divided by profound political differences. Yet surprising similarities exist in the changing relations between the public and private sectors. Throughout the region, public and private sectors lock into a vicious circle. The inability of the state to provide order and social harmony creates disincentives for the private sector to invest or even to continue existing levels of production. The government responds by increasing its responsibilities at the expense of the private sector. In doing so it assumes risks the private sector refuses, but further alienates the private sector nonetheless.     

Multilateral development banks,transparency and corporate clients: ‘public–private partnerships’ and public access to information

The multilateral development banks (MDB) recognise and promote transparency as a principle of good governance. Public release of information about policies and projects is a central aspect of this transparency, and the five MDBs studied here each adopted new policies during the 1990s to increase the accessibility of such information. The flow of information to local communities is important to the effectiveness of MDBs' social and environmental safeguards and to securing public support. But MDBs also embrace a second strategy, which sometimes conflicts with transparency: each MDB (or an affiliate) lends to private corporations as well as to member states and each bank modifies its information disclosure rules, giving corporate clients greater discretion than member governments. Environmental and social safeguards apply to corporate borrowers as well as to governments and there is a relatively high level of controversy over corporate projects' environmental and social impact. When subjected to a qualitative review of their disclosure standards, emphasising fullness of disclosure, accessibility of information, timeliness of information and availability of recourse, the disclosure policies of all five MDBs are clearly found to accommodate corporate confidentiality while compromising public demands for information. Copyright © 2003 John Wiley & Sons, Ltd.     

The challenges of fractionalized property rights in public‐private hybrid organizations: The good,the bad,and the ugly

Policy designers seeking to harness profit‐driven efficiency for public purposes are increasingly creating organizations with fractionalized property rights that distribute “ownership” among public and private actors. The resulting hybrids are quite diverse, including mixed enterprises, public‐private partnerships, social entrepreneurship organizations, government‐sponsored enterprises, and various other hybrid forms. Marrying public purposes to private sector efficiency and strategic flexibility provides a tempting rationale for mixing public and private owners in hybrid organizations. Because public‐private hybrids involve fractionalized property rights, however, they exhibit tension among owners over both strategy and, more importantly, goals. To understand public‐private hybrids, we assess them in terms of six dimensions of property rights: fragmentation of ownership, clarity of allocation, cost of alienation, security from trespass, credibility of persistence, and autonomy (of both owners and managers). The unclear allocation of fractionalized ownership rights facilitates the appropriation of financial residuals and asset ownership opportunistically. Other weaknesses in the property rights configurations of public‐private hybrids create managerial dissonance or opportunistic behavior that typically leads to a narrowing of goals, but sometimes also to organizational failure.     

The changing politics of lobbying: private sector organizations in Mexico

This article analyzes how the relations between Mexico's private sector, particularly that of business power groups and interest groups, and the political elite changed as a result of processes of neo-liberalization and democratization from the early 1980s through the presidency of Vicente Fox (2000–2006). The analysis provides several insights into Mexico's developing interest group system during these years and particularly that of business interests. On the one hand, the changes increased political pluralism, the number of groups operating, and their lobbying options and helped move Mexico toward liberal democracy. On the other hand, with its major resources and political connections, big business was able to maintain, in fact enhance, its political status, whereas small business was less politically successful. Moreover, many old political practices used by big business to influence government persist as well as skepticism among the public regarding democratic institutions. As a consequence, this article argues that despite the new developments in political advocacy, the continuation of traditional political practices presents obstacles to the development of interest group activity resulting in a plutocratic element to Mexico's emerging democracy. Copyright © 2013 John Wiley & Sons, Ltd.     

Public and private sector wages interactions in a general equilibrium model

It is common wisdom that public sector wages are not determined in the same way as private sector wages. At the same time, the empirical evidence available for OECD countries finds a strong positive correlation between public and private sector wages. In this paper, we develop a model that is consistent with a political economy view of the determination of public sector wages and employment, while being consistent with the said empirical evidence. Public finance constraints are crucial: In booms, governments expand employment and wages, while in downturns, lack of tax revenues forces the government to cut back the wage bill.     

Assessing the institutionalization of private sustainability governance in a changing coffee sector

The potential of transnational private governance initiatives to constitute effective alternatives to state‐led regulation of global value chains rests on their ability to scale up and become institutionalized in a given sector. This study examines whether such institutionalization has occurred in the coffee sector, the commodity with the most widespread adoption of certified products and over 30 years’ experience of private governance, and tests hypotheses on facilitating and inhibiting conditions. It finds that while norm generation around responsible supply chain management and the organizational institutionalization of standard‐setting bodies is well advanced, the practice of internalizing social and environmental externalities through the routinized production and purchase of higher priced certified goods continues to be questioned by industry actors. Indeed, conditions that favored normative and organizational institutionalization, such as high levels of industry concentration, product differentiation, and deliberative interaction, are shown to represent barriers to the practice‐oriented institutionalization of market‐driven regulatory governance.     

India's experience—national,community, public or private health?

India, as the largest democracy, second most populous country, ninth largest industrial power and fifteenth poorest nation, has in respect of health care to be considered as a special case among developing countries. Nevertheless, the identification in India, as an alternative to national welfare provision, of opportunities for returning social and economic responsibilities for health care to local communities is important for both developing and developed countries. This article outlines and comments upon recent developments in providing primary health care in rural communities in India. It concludes by examining possible parallels between self-sustaining community health schemes and the search in developed countries for community and personal involvement so as to overcome emergent limitations of professionalized and welfare systems of care.     

Public sector reform in the Latin American and Caribbean region—issues and contrasts

Public sector reform in both Latin American and Caribbean countries has become a high priority for governments in their search for a new role for the state. Common principles have included the objective to privatize, or contract out services or responsibilities where the private sector has a comparative advantage while at the same time improving government efficiency in areas that are considered core government functions at different levels of government. These include integrated government financial management, social security and social safety nets, tax administration, provision of basic services (education and health), legal/regulatory reform, and judicial enforcement. Guiding principles in all countries have been predictability, transparency and accountability. While the degree of reform has varied amongst countries, there are a number of distinguishing features of the Commonwealth Caribbean that set its public sector reform experience apart from that of Latin America. These include the legacy of a professional civil service, long-standing democratic institutions and an active civil society, the relatively small size of the countries, and the emphasis on rule of law that can help explain some of the differences in the reform paths taken. Nevertheless, government ownership and commitment to public sector reform has been shown to be the most important element in determining results within the Latin American and Caribbean region.     

The role of the state in enabling private sector development: an assessment methodology

There are many ideas about how the state can and should enable private sector development. However, most of these ideas are not derived from the private sector itself. Participatory policy research has so far been confined to public sector development contexts. This article provides some background information about the garment and textile industry in Zimbabwe. It then describes one pioneering attempt to develop and assess an enabling state assessment methodology in this context, for possible use in the private sector more generally. The methodology described consists of a series of participant‐developed checklists, around the predetermined themes of the policy, agency and enterprise environments. These checklists were explored through the use of semi‐structured dialogue, using visual methods such as impact diagramming, Venn diagramming, master charts and problem trees, in the context of enterprise‐based meetings and two subsequent workshops. The article summarizes the main constraints and recommended actions identified by the participants. The participants, the researchers and the author also assess each step of the methodology.These steps include: developing an agenda; designing the process; identifying a target population and research team; developing and applying the methodology; analysing the results and documenting the process. Lessons are also drawn from this assessment for each stage of the methodology. This article concludes with a discussion about the transferability of the methodology and the need to experiment with other methodologies. The final section also draws out the differences and similarities between this and other types of participatory policy research. Copyright © 2000 John Wiley & Sons, Ltd.