Public Enterprises and the Budget in Developing Countries

Public enterprises have a substantial fiscal impact in developing countries. This has led to the enterprises impinging on the budgetary process of the government while public enterprises are burdened by budget policies and macroeconomic policies. Such difficulties may necessitate the restructuring of public enterprises, either through privatization or reform to make them more competitive with the private sector.     

A shrinking state? Politics,economics and private health care in Thailand

This article explores the political and economic forces involved in the development of privatization policies within the health care sector in Thailand. It is suggested that many of the motivating factors behind private sector growth are outside of the health sector; the general macroeconomic environment and tax incentives have stimulated private sector expansion. Within the Ministry of Public Health a preoccupation with improving care in rural areas and an unclear policy line on the private sector has facilitated this expansion. Only recently has private sector growth come to the policy agenda. During this lag period a number of interest groups have developed. It will be difficult to overcome these entrenched interests in order to change policy direction. Meanwhile, problems of rapid cost inflation and inequity face the Thai health care system. Although this case study focuses upon the health care sector in Thailand it would appear relevant both to other sectors and to other countries. The relationship between development models based upon pro-private, pro-market tenets and the establishment of a satisfactory social policy is questioned.     

Towards a stages theory approach to privatization

In analysing the path of optimal sequencing of privatizations by public administrations, it is too simplistic to characterize the process as one in which in the early phase small state-owned enterprises are disposed of and, in the later stage, the larger enterprises. Such a dichotomy fails to capture fully the market failure elements, technological dimensions, sociological imperatives and political constraints that help to determine the choice and timing of enterprises to be privatized. Rather, the privatization experience of the developing and developed countries, including the former centrally planned economies, can be eclectically analysed as traditional, transitional and transformation stages in an almost inexorable movement towards a pure capitalist economy. In the traditional stage, countries have tended to privatize those enterprises for which the private sector has an obvious comparative advantage. In the transitional stage, the privatization programme includes certain important enterprises, which, despite a considerable amount of government subsidy or tariff protection, have performed ‘inefficiently’. In the stage of transformation from a still basically mixed economy to a near pure capitalist economy, there is privatization of the strategic enterprises. Although the stages approach varies between countries, the above-mentioned sequencing allows for more effective cumulative internalization of the learning experience.     

Institutional preconditions of privatization in market-based political economies: Implications for Jordan

Concepts of privatization have been adopted on a global scale. Yet few studies examine issues other than economic and selected political ones. This article argues, however, that a broad spectrum of institutional considerations must be evaluated in order to assess the viability of any proposed privatization strategy. A further distinction must be made between countries with developed markets and those market-based political economies (MBPEs) whose extant institutional configurations have not reached a level of independence to fully support extensive privatization measures. Jordan, Turkey and Egypt would be examples of such countries. This article contends that the enactment and implementation of privatization policies will achieve its avowed goals only (a) if the state-controlled enterprises (SCEs) are sufficiently independent of their supervising bureaucracies (presumably a ministry, the treasury or development planning organization) prior to their transfer to a private partner and (b) if the government possesses requisite monitoring capacity to ensure the fulfilment of contractual obligations of the privatized entity. An ancillary thesis suggests that the societal and organizational culture must be succinctly separated to warrant a full-scale transfer of SCEs to the private sector. In Jordan, privatization has been discussed for a number of years, but no projects have been attempted so far. The article assesses the likelihood of large-scale privatization occurring soon.     

THE MYTH OF PRIVATE SECTOR SUPERIORITY IN PERSONNEL ADMINISTRATION

This article addresses the assumption that private sector management is more efficient than public sector management. It identifies the ways in which public and private sector personnel management are alike, and the ways in which they are different. The differences help the reader understand the reasons for the myth o f private sector superiority. This essay argues that, given the purposes of government employment which have littlet do with management efficiency, and which even militate against it, the criterionof efficiency is misplaced in the evaluation of the effectiveness of public administration. Using a variety of behavioral and motivational measures, it is demonstrable that workers in the public sector are not less likely to seek opportunities for personal fulfillmerit in their jobs than workers in the private sector. The lazy and indolent stereotype does not hold up.     

The Public/Private Cleavage in a Welfare State: Attitudes Toward Public Management Reform

This study contributes to the growing literature on differences in attitudes between public and private sector employees, particularly with respect to their receptivity or resistance to public management reforms. We begin by asking the question: to what degree does perceived self-interest play a role in accounting for attitudes toward public management reforms such as downsizing, privatization, and public spending? Using attitudinal data from Sweden, a social welfare state with a large public bureaucracy, a tension is observed both among public employees in different levels of government and between public and private sector employees. In the context of public management reforms, national government employees emerge as more right-leaning politically and more supportive of public management reforms than those working in local government. The analysis finds, particularly among national government employees, that while interest as measured here is strongly related to attitudes toward reform, status as a public employee and status as a public bureaucrat are not as significant as other components of interest in accounting for attitudes toward public management reform.     

A Contagious Concept: Explaining the Spread of Privatization in the Telecommunications Sector

Qualitative studies suggest that the spread of privatization of public utilities is due to a change of the economic paradigm and institutional isomorphism pressures. However, current quantitative studies mostly account for domestic factors. These factors can explain differences in national privatization trajectories but cannot explain the large trend. Based on a quantitative analysis of privatizations in the telecommunications sector in 21 OECD countries, the article argues that emulation pressures can explain the trend toward privatization. The analysis suggests that privatization gained legitimacy as more and more governments emulated privatization policies they observed in countries they perceived as similar. However, the article finds no evidence of cross‐sectoral diffusion. Thus, according to the analysis, telecommunications privatization diffused within the same sector between countries, but not within the same country between different sectors.     

Outsourcing Public Health Laboratory Services: A Blueprint for Determining Whether to Privatize and How

In a continuing effort to reform and reinvent the way public organizations do business, the outsourcing of services has become a popular tool, particularly as resource constraints limit options available to governments. All too often, the decision is made, for reasons of ideology or resource constraints, to outsource services without giving careful consideration to the impact of privatization on the core missions of an agency, or whether privatization, in fact, offers real cost savings. Purchasing tools designed for traditional commodity purchases are often grossly unsuited for making decisions on specialized technical services.
This article suggests a process for the evaluation of an option to outsource laboratory services. It suggests that, prior to contracting or privatizing services, the concerned agency should evaluate:
the impact on the agency's core mission
the availability, stability, and reliability of private sector service providers
the relative costs of internal and external (public or private sector) service providers
the potential impact on regulatory enforcement
the ability to monitor the performance of external providers
potential conflicts of interest
Based on this model, the ongoing internal evaluation of services offers public agencies management tools to obtain the best value for the taxpayer dollar, not only in terms of the raw cost per test, but also in managing the quality of the services.     

Dynamics of Sector Switching: Hazard Models Predicting Changes from Private Sector Jobs to Public and Nonprofit Sector Jobs

Policy makers and public managers emphasize the importance of bringing private sector experience and skills into the public and nonprofit sectors. One result is an increased focus on privatization and contracting out, developments to which researchers have been attentive. However, the long-standing practice of hiring people with industrial experience into the public and nonprofit sectors has received remarkably little attention. This study, based on questionnaire responses from mid- and upper-level personnel in public and nonprofit sector organizations, attempts to understand the dynamics of sector switching from the private into either the public or nonprofit sector. Using event history analysis, the article looks at switching patterns. The probability of switching into the public sector is much higher for those who held a managerial occupation in their previous private sector job than for those who held professional and technical positions. Having more subordinates in a previous private sector job is associated with a lower likelihood of switching into a public sector job. By contrast, switching into the nonprofit sector is more often associated with a promotion.     

Personnel practices in careers of women at the top in government and business in Nicaragua and Costa Rica

This article, which is the first empirical study of upper-level female managers in Central America, extends the exploration of similarities and differences between public and private sectors in human resource management to the context of developing countries. A comparison of work hours, recruitment and selection practices, mentoring, political pressure, gender discrimination and sexual harassment, reported by female managers in public and private organizations in Nicaragua and Costa Rica, yielded no sector-based differences and few country-based differences. We conclude, therefore, that the public sector is not a more supportive or more fair employer for women in management than the private sector in these two countries, contrary to the assumption in the women-in-management literature that the public sector is a more hospitable environment. Improvements in human resources practices are appropriate in both sectors.     

Privatization of public-sector services in theory and practice

The last ten years have seen a marked increase in the analysis and implementation of private-sector alternatives to the production of public-sector services. The impetus for privatization has two sources: (1) opposition to further growth of the public sector, and (2) the belief that the private sector would be a more efficient producer. Yet as privatization moves beyond the acquisition of intermediate goods and services (payroll processing and housekeeping services, for example) to more complex public outputs (such as education, social security, public safety, the postal system, for example), it is subject to increasing challenge on both efficiency and equity grounds. Nonetheless, private alternatives to public production are finding increased acceptance.     

Privatization Within the Chinese State

This article suggests that China's public and collective enterprises have contributed to its economic growth and socio-political stability. The efficiency of these enterprises has been improved not through the privatization of the state (transferring public ownership to private hands) but privatization within the state (decentralization, appropriation, and marketization). This article first provides statistics to juxtapose the growth of the Chinese economy to the continued expansion of public and collective enter-prises. I t then explains the causes and benefits of privatization within the Chinese state. A case study of privatization within the state in Shanghai City follows. The article concludes that China's economic reform has been a transformation of socialism, not a transition to capitalism, and that it is a less costly but more effective alternative to the privatization of the state approach. The former communist countries in Europe have painfully followed this latter approach and have suffered from its political, social, and economic consequences.     

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.)     

Privatization,regulation and development: Some questions of training strategy

In the current debate over the role of the public sector and its effective and efficient management, too little attention has been paid to the training implications of the various policy options. These include privatization as well as public enterprise performance improvement and rehabilitation. Third world training institutions are only just beginning to respond to the new tasks of re-equipping public sector managers to enable them to play a more ‘enabling’ or ‘facilitating’ role vis-à-vis the private and parastatal sectors. Accordingly, this article suggests a number of major elements that need go into any national training effort to strengthen the government-enterprise interface, including some of the curricular content, needs for case and teaching materials, developing training methods, the role of research, possibilities of a regional approach and the role of the international donor community.     

State reform and the ‘privatized state’ in Paraguay

This article uses Paraguay, in Latin America, as a case study in order to examine the difficulties of introducing state reform where the state itself has a long history of control by private interests. It shows how the ‘privatized’ nature of the Paraguayan state is central to an understanding of how it has functioned and responded to recent reform efforts. The article provides an overview of the Paraguayan public sector and identifies several of its peculiar features that are relevant to understanding the state reform process: its small size, high levels of inefficiency and ineffectiveness, rampant politicization and endemic corruption. The article examines the three major components of an externally driven state reform process that began with democratization in 1989: privatization of loss‐making state corporations, civil service reform and decentralization. It shows how the ‘privatized’ nature of the state has proved a major obstacle to these efforts and is a major factor in explaining their limited success. The article concludes by offering a pessimistic assessment of the likely prospects for state reform and highlights the danger that Paraguay could descend into a ‘failed state’. Copyright © 2002 John Wiley & Sons, Ltd.     

Is Activity-Based Costing Up to the Challenge When It Comes to Privatization of Local Government Services?

After its initial success in the private sector, activity-based costing (ABC) has been embraced by the public sector as an analytical tool that can be used to improve the efficiency of government operations, especially in the area of the privatization of operations. Despite claims that ABC can greatly enhance the evaluation of how to most efficiently deliver services, there are significant obstacles that must be overcome before ABC can be effectively implemented. In order to underscore the challenges facing successful ABC execution in the public sector, the use of activity-based cost accounting by the City of Indianapolis for its privatization initiatives is discussed. Generally ABC is not up to challenge of providing local governments with the tool necessary to comprehensively evaluate direct services and determine which are candidates for contracting out or privatization.     

Privatization and Regulatory Reform of Toll Motorways in Europe

This article analyzes current trends in toll motorway privatization in Europe as an illustration of the paradox of simultaneous deregulation/privatization and reregulation. Changes in the form of government intervention are identified as transitions from internal control on processes and inputs to external control on performance outputs. The state guarantees its capability to intervene and seek its own objectives even when giving up public property. In fact, output regulation is a partial substitute for public ownership. We analyze the hypothesis that privatization of motorways spurs price regulation. Indeed, we observe that toll regulation becomes more detailed as the private sector increases in size, which is a regular reaction across different institutional frameworks. This result is consistent with the literature on the rise of a regulatory state, which emerges with a new mode of governance based on indirect government. Moreover, the study provides evidence of the importance of temporal context in modeling public sector restructuring.     

Strategic management of privatization: a framework for planning and implementation

The continuing interest of governments around the world in privatizing state-owned enterprises (SOEs) is making privatization policy an important instrument for promoting market-oriented approaches to economic development. Privatization has become an integral part of administrative reform in former centrally planned socialist economies, developing countries, and post-industrial societies. More than a decade of experience with privatization provides lessons that can help governments to plan, implement and manage the process more efficiently, effectively, and responsively. The framework for managing privatization described here draws from lessons of that experience to define the forms, scope and pace of privatization, choose organizational structures for management, identify macropolicy and institutional reforms necessary to facilitate privatization, and develop management procedures for implementing privatization programmes successfully.     

Local Government Restructuring: Privatization and Its Alternatives

Local government restructuring should no longer be viewed as a simple dichotomy between private and public provision. A 1997 survey of chief elected township and county officials in New York shows that local governments use both private and public sector mechanisms to structure the market, create competition, and attain economies of scale. In addition to privatization and inter‐municipal cooperation, two alternative forms of service delivery not previously researched—reverse privatization and governmental entrepreneurship—are analyzed here. Logistic regression on the 201 responding governments differentiates the decision to restructure from the level and complexity of restructuring. Results confirm that local governments are guided primarily by pragmatic concerns with information, monitoring, and service quality. Political factors are not significant in the restructuring process and unionization is only significant in cases of simple restructuring (privatization or cooperation used alone). Fiscal stress is not a primary motivator, but debt limits are associated with more complex forms of restructuring. Restructuring service delivery requires capacity to take risks and is more common among experienced local officials in larger, higher‐income communities. Restructuring should be viewed as a complex, pragmatic process where governments combine public and private provision with an active role as service provider and market player. © 2001 by the Association for Public Policy Analysis and Management.     

Goats or wolves? Private sector managers in the public sector

Public administration reforms have propagated the use of private sector management skills in the public sector, and an increased openness to managers with a private sector background. This has created a debate between those who think private sector experience improves public institutions by bringing core managerial values such as results orientation, efficiency, or openness to innovation, and those who argue that private sector experience can damage core public sector values, such as impartiality and equity. Despite the abundant anecdotal evidence, broad empirical evidence on the effects of private sector experience on public managers' values remains limited. Using data from a survey among central government top managers in 18 European countries, we show that public managers with private sector experience have, as expected, more core managerial values. Yet, unlike the conventional view, core public values do not suffer.