Regional fiscal cooperation in metropolitan areas: An exploration

This article explores the potential benefits and costs of regional cooperation on metropolitan area fiscal policies. After discussing the relationships between cities and suburbs, as well as the role of local fiscal policies in regional well‐being, the article presents and tests a model for measuring benefit spillovers resulting from fiscal policies. The results show that state and local infrastructures have important effects on metropolitan property markets, and that current spending is less influential than the level of public capital in place in determining property values. State highway investments are found to reduce the attractiveness of metropolitan area locations. Enhancements to central city infrastructure are estimated to significantly increase suburban property values, and the results of some simple policy experiments are examined.© 1999 by the Association for Public Policy Analysis and Management.     

Transparency of Risk and Reward in U.K. Public–Private Partnerships

Public–Private Partnerships (PPPs) are an increasingly common mechanism for the renewal of public sector infrastructure, although in the United Kingdom, these have been criticized as representing poor value for money. An inherent assumption of much of this criticism is that a corollary of detriment for the public sector is benefit for the private sector. This paper highlights the difficulty of objectively verifying the many criticisms and assumptions regarding risk and reward associated with PPPs. Public and private sector disclosure policies and systems are analyzed and we conclude that neither sector practices openness and transparency. This results in a democratic accountability deficit in the public sector and a lack of meaningful data being made available to stakeholders in private companies.     

Globalisation, Marketisation and Power: The Swedish Case of Institutional Change

Globalisation is often thought to threaten the autonomy of national policymaking and generous welfare policies. This article examines two decades of policy change in Sweden, often viewed as a prime example of a fully fledged welfare state. The analysis is focused on reforms within the welfare sector, which is compared with three other important areas – credit markets, the labour market, and infrastructure policy. These areas can all be seen as crucial aspects of the Swedish social democratic model.  The findings can be summarised in three parts. First, seeing the credit–market deregulation as the first phase of the internationalisation of capital in Sweden lends some support to the idea of globalisation as the result of political decisions rather than a structural change caused by technical change. Second, during the last two decades, there have been signs of marketisation of the Swedish public sector. However, this analysis does not give support to the simple hypothesis of globalisation. There are quite large variations both between and within policy areas, variations that are not easily related to international integration. Third, marketisation involves a shift in political power. An overall effect is that the government has lost some of its former direct influence. However, behind the façade of the invisible market we find the same actors as before influencing policy. Globalisation can have tremendous effects on power. Whether or not this will be the case is first and foremost the result of political decisions and individual desires.     

Leviathan in a dual economy

This paper studies the policies of a leviathan state with an ambition to make money and to stay in power. The economic framework is a developing country characterized by dual markets. Government revenue is raised by taxing the agricultural sector. Part of this revenue is offered to the politically influential urban population in the form of low productive but well paid public sector employment. I calculate the optimal level of rural taxation from the point of view of the Leviathan and investigate its effects on migration, industrialization, public sector employment and urban unemployment in different political scenarios.     

E‐government and public service quality in Ghana

This article contributes to the growing discourse on the potential of e‐government to transform the operations of public sector institutions, thereby improving public services. It does so by conceptualizing public service quality into efficiency, economy (cost reduction), customer satisfaction, and service accessibility and draws on qualitative data from the Ghanaian narrative for illustration. As previous studies have demonstrated, this study also affirms the potential of e‐government in improving public services delivery by increasing efficiency, reducing the cost of operations, expanding access to services, and achieving customer satisfaction. Yet, there remains a repertoire of challenges such as weak ICT infrastructure especially in towns and villages, incessant power outages and illiteracy, which are drawbacks to fully harnessing the benefits of e‐government in Ghana. The study recommends that these challenges should feature prominently in e‐government policies to increase the chances of solving them.     

More Queensland Exceptionalism: Public Sector Industrial Relations from New Labor to the Old Coalition

Public sector change across Western economies produces broadly similar results for the state and for public employment relations. Yet local variations can matter, as governments choose how vigorously to pursue downsizing, constructing and decentralisation. As an example of such regional differences, this paper examines the form of public sector change introduced in Queensland under Labor and Coalition governments, and the implications of union strategy.     

Policy Reform and the Problem of Private Investment: Evidence from the Power Sector

Development economists frequently emphasize the importance of good infrastructure for economic growth. Can governments attract private capital in infrastructural investments through policy reform? We address this question by showing that, in the case of electricity generation, a simple legislation enabling independent power production increases private investment in electricity generation by more than an order of magnitude. Contrary to the conventional wisdom on the importance of constraints on executive power for credible commitment, we find that such constraints neither draw private capital nor condition the effectiveness of policy reform. We also find that both domestic and foreign investment increase with IPP reform. Evidence for these claims comes from an instrumental variable analysis of power sector reforms and private electricity generation in all developing countries for the years 1982 to 2008. Simple and politically uncontroversial policies can generate positive results in developing countries.     

Public sector efficiency: An international comparison

We compute public sector performance (PSP) and public sector efficiency (PSE) indicators, comprising a composite and seven sub-indicators, for 23 industrialised countries. The first four sub-indicators are “opportunity” indicators that take into account administrative, education and health outcomes and the quality of public infrastructure and that support the rule of law and a level playing-field in a market economy. Three other indicators reflect the standard “Musgravian” tasks for government: allocation, distribution and stabilisation. The input and output efficiency of public sectors across countries is then measured via a non-parametric production frontier technique. The study finds significant differences in PSP and PSE, which suggests a large potential for expenditure savings in many countries.     

Public Capital Investment and Economic Growth in Forth Worth: The Implications for Public Budgeting and Infrastructure Management

There is a common assumption that local government investment in infrastructure stimulates private development. This article examines relationships in one southwestern city between public capital spending and city infrastructure assets and private economic activity as measured by building permit activity, permit values, and assessed property valuations. Two research questions are examined: (1) Is public investment in new capital associated with private capital formation? and (2) Is public investment associated with improvements in the property tax base? The findings hold implications for infrastructure planning, budgeting, and management. First, public and private capital spending patterns varied in tandem across several cycles, and tracking such cycles may help public managers predict short- and mid-term infrastructure needs. Second, utility capital spending is critically related to private capital formation, and may offer higher fiscal returns than other public infrastructure. Third, infrastructure capital had a strong significant effect on the assessed value of urban property, and will therefore influence the property tax base.     

A distributional theory of government growth

This article presents a closed form solution for time-consistent taxation and public spending in a dynamic game between government and median voter. Extending Meltzer and Richard’s static analysis of government size the article offers a theory of growth of government. At low stages of economic development the median voter, identified as a relatively poor worker, prefers to have no or only small redistributive taxation in order to foster savings. Through this channel he expects improvements of his labor productivity and wage. At higher stages of development, however, when capital is relatively abundant and prospects of further labor productivity gains through capital accumulation are smaller, the incentive to tax and redistribute income rises. Yet, in line with previous work on growth and infrastructure spending the median voter prefers a constant share of productive public spending at all times. Hence, government growth is solely driven by an expanding welfare state.     

Government Support Programs and Private Investments in PPP Markets

ABSTRACT:

Public-private partnerships (PPPs) have become an important tool for investing in and developing public infrastructure and services. However, many developing countries have failed to attract sufficient private investment from the PPP market. This article uses data from 4,484 PPP projects across 130 developing countries to investigate if and how distinct types of government support can attract more private investment. Results showed that capital, revenue, and in-kind subsidies directly provided from governments attract more private capital, while indirect supports through government guarantee policies do not. The institutional quality of a country enhances the positive relationship between direct government support and private PPP investments. Further, risk allocation plays a mediating role between government supports and private investment.     

The Changing Public-Private Infrastructure Mix: Economy-wide Implications

This article provides an economy-wide perspective on the changing role of the public sector in developing economic and social infrastructure in Australia. It analyses the scale and macroeconomic significance of the key economic and social infrastructure sectors — communication services, electricity, gas and water supply, transport, education, health and community services, government administration and defence. It then canvasses the major policy issues that have arisen in the progression from public to private infrastructure provision and considers why concerns about the trend fall in traditional public works spending may be misplaced in light of recent economic and institutional changes.     

Policy actions for developing the infrastructure sector: Learnings from the Indian experience

The infrastructure sector is one of the major pillars for economic growth and development of a country. The responsibility to develop this crucial sector is shifting away from the public to the private sector. After the economic liberalization in 1991, India opened the infrastructure sector, among many others, to private domestic and foreign investment. The shortage of electricity, the poor state of roads, and limited telecom access necessitated a stream of persistent reforms, which were expected to play a significant role in the infrastructure sector's growth. Although some subsectors witnessed success, others continued to face hurdles. The paper highlights the role of infrastructure in socio-economic development through global literature. It also presents a story of infrastructure development in India since the inception of economic liberalization. It highlights various challenges that discourage private sector investments, thus providing a rationale for policy initiatives by the government. The paper also presents critical issues highlighted by multiple government committees over nearly three decades and identifies residual issues that merit attention. The outcomes of the paper are relevant in the context of developing and emerging economies.     

Mobile Capital, Democratic Institutions, and the Public Economy in Advanced Industrial Societies

This article addresses the following questions. Is international capital mobility systematically related to reductions in the size of the public economy, as globalization theory suggests? Alternatively, do democratic institutions and processes shape the ways in which internationalization affects national policies? Specifically, I argue that the effects of capital mobility on the scope of the public economy should be conditioned by the institutional forms of societal interest representation and the formal organization of decision-making authority within the polity. Utilizing econometric analysis of 1964–1993 data from 16 nations, I find that international capital mobility has few direct effects on the scope of the public economy. However, configurations of democratic institutions fundamentally shape the domestic policy impacts of capital mobility. Where social corporatism and inclusive electoral institutions are strong and where decision-making authority within the polity is concentrated, international capital mobility is either unrelated to the scope of the public economy or positively associated with total public spending, social transfers, and public consumption. In institutional contexts of pluralist interest and exclusive electoral representation, and in polities where decision-making is dispersed, rises in capital mobility are systematically associated with rollbacks of the public sector.     

The Curse of Sisyphus: Public Sector Audit Independence in an Age of Economic Rationalism

Consistent with the economic rationalist philosophy which now pervades the decisions and policies of all Australian governments, the persuasive aura of competitive markets has been used to justify the provision by the private sector of an increasing range of public services. Governments who have been consistently antagonised by the findings of the auditor-general are now attempting to use the arguments for competition in the public sector to diminish the stature and role of the auditor-general. In place of audit models which are based upon an auditor who is able to conduct audits on behalf of parliament, the auditor-general is to be increasingly isolated from the means to audit. This represents the onset of a radical interpretation of public sector audit which will usher in the last days of an independent public sector audit function.     

Business Experts on Public Sector Boards: What Do They Contribute?

Although public management reforms around the world have given business experts an enhanced role in the governance of public sector organizations, the impact of this change is poorly understood. Drawing from the literature on board human capital as a theoretical framework and focusing on the case of hospital boards in the English National Health Service, this concern is addressed by investigating whether increasing the presence of individuals with business expertise has any significant relationship with organizational performance. The findings show that while business expertise appears to have no influence on service quality, it does have a positive effect on financial performance. However, this only applies to governing boards that are less experienced in terms of their collective tenure. The findings lend partial support to board capital theory but also show that in certain conditions generic business expertise can be a valuable asset for public sector organizations.     

The role of institutional and governance factors in public–private partnerships infrastructure investments in emerging economies

The overall development and sustained growth of any economy depend heavily on its infrastructure provisioning. Emerging economies are usually characterised by constrained public investments in infrastructure. Budgetary constraints of the governments are one of the major hurdles to these investments. Due to these reasons that governments of emerging economies continuously seek collaborations with the private sector for additional sources of funding infrastructure. Economies with solid institutional and governance frameworks are known to provide a conducive environment for enhanced private sector attraction in the sector. However, emerging economies face greater institutional and governance issues than developed economies, and they sometimes fall short of luring private investments in the infrastructure sector. The objective of this study is to empirically evaluate the role of institutional and governance aspects in private sector attraction in emerging economies. This study provides empirical evidence with a sample of 114 emerging economies over a period of 20 years. Various econometric estimates were developed to explore the interplay between public-private partnership investments and governance factors. The results of the study provide an evidence of a positive association between these factors and private investments in public-private partnership arrangements.     

Re-evaluation of the Importance of the Public Service: Tasmania's Collaborative Program

In considering what should be the role of government in a community like Tasmania we need to understand the context within which we are working. We are a small population that is almost without exception a branch economy. No major corporations are based here – we have branch offices or divisions of major companies. We lack a managerial class – headquarters and management staff are based elsewhere – decisions made by the level of management based in our state do not take the welfare of the state into account. Our private sector does not have the capital and quite clearly the capacity to take up the challenge posed by a reduction of government services or a contraction of services. When public sector jobs are cut in Tasmania they stay cut. The private sector does not step into the breach and create jobs. Tasmania has always relied, to a large extent, on the public sector for its economic viability – with the contraction of public sector funding, the viability of the state's economy has been seriously eroded.     

Dilemmas in Policy Support for the Arts and Cultural Sector

This article questions the specific challenges that the management of culture poses for government.² Unlike some ‘public good’ policy domains, such as prisons, defence or infrastructure, or benefit provisions such as unemployment, disability or health measures, the complex area of cultural policy cannot be justified in instrumental terms as an essential ‐ or unavoidable ‐ policy of government. Nonetheless, the cultural lobby is an effective and indefatigable pressure on government. The area of culture is just one small component of the public agenda that governments are obliged to support. Given other pressing portfolios, why do governments continue to take an interest in culture? Moreover, recent government policies seem to be setting up problems for the future such that governments will find it hard if not impossible to extricate themselves from a problematic relationship. So, what is the hold that culture has over governments? Traditionally, the answer seemed to be a combination of boosterism and cultural capital. Governments liked to bask in the reflected glory of cultural success believing that it contributed to their legitimacy and cultural competence. The glow of elite culture was seen to rub off onto political incumbents and their regimes. But in an age of pressures on government to justify public expenditure and meet accountability regimes, cultural support continues to appear on the funding agenda and governments continue to become embroiled in debates about competing support formulae. This relates to both the nature of ‘culture’ and broader definitions under the banner of ‘cultural policy’ as well as the nature of the sector which is, at once, elitist, institutionalized, commercial, highly specialist, niche and industry ‐ all premised on intangible nature of ‘creativity’. Paradoxically, contrary to other trends in public policy, arts and cultural funding has reverted to forms of patronage as the centrepiece of broadly defined policies of access, equity and self‐sufficiency. How has this policy portfolio managed to buck the trends of other domains of government attention? This article attempts to open some new ways of examining the question.³     

An Evaluation of Private Sector Provision of Public Infrastructure in Australian Local Government

Private sector provision of public infrastructure in Australia at all levels of government, including local government, has steadily increased over the past twenty years. Nevertheless, this method of providing public infrastructure remains controversial. This article seeks to provide a critical review of the arguments surrounding private sector provision of infrastructure in Australian local government. It examines both the case for private sector provision of municipal infrastructure in Australia and the major arguments advanced against this approach to infrastructure development. Given the conceptual argumentation and empirical evidence on private municipal infrastructure provision, it is argued that policy makers should employ a nuanced performance evaluation framework to assess the benefits and weaknesses of private provision on the basis of the specific type of infrastructure in question and the kind of services it provides rather than simply endorse carte blanche privatization.