Pursuing Private or Public Accountability in the Public Sector? Applying IPSASs to Define the Reporting Entity in Municipal Consolidation

Private-sector accounting systems have often been heralded as superior to public-sector ones and suggested as solutions to the shortcomings of the latter. Our article aims at contributing to this debate by looking at the adoption of business-like practices where the public and private sectors intersect. Our analysis shows that the adoption of International Public Sector Accounting Standards (IPSASs), strongly inspired by International Financial Reporting Standards (IFRS), might not ensure the expected disclosure. Municipalities adopting IPSASs for preparing consolidated financial statement do not necessarily increase accountability because some relevant public service providers are not included in the reporting entities.     

WILL THE PRIVATIZATION OF PUBLIC ENTERPRISES SOLVE THE PROBLEM OF CONTROL?

The Government's privatization programme has acquired such momentum that hardly any public enterprise is exempt from action or proposals. Evaluation of the programme must recognize the diversity of privatization policies, and the tensions inherent within their objectives. Ideological motivation has been supported by the inability of policymakers to design a viable framework of economic and financial control over public enterprises. This has led to a view that it is impossible to manage business efficiently within the public sector, the constraints of which can only be escaped by ‘setting the enterprise free’. However, decisions now will close future options, only be escaped and may be prohibitive to reverse. A list of unanswered questions remain about future relationships between hybrids and governments, the costs and benefits of the regulatory systems which will replace public ownership, and the balance between public policy and private interests. Can the market succeed where the state has been judged to have failed?     

Did Public Transfers Crowd Out Private Transfers in Korea During the Financial Crisis?

How effective are public transfers in protecting households facing financial crisis-induced negative shocks? Existing studies have not yet carefully considered the inter-relationship between public transfers and the existing private transfer network. In the context of the financial crisis in Korea, this paper investigates the possible crowding-out effect of public transfers on private transfers by explicitly considering the endogenous responses of private transfers against public transfers. By using two Korean household-level panel data sets for the periods of 1995–1998 and 1998–2003, we found a post-crisis, but not pre-crisis crowding-out effect of public transfers; more importantly, a crowding-in effect is observed during the crisis. The results suggest that private transfer networks were strengthened under the initial phase of the financial crisis, which possibly complemented public transfers due to the lack of effective formal safety nets, while public transfers became effective after the crisis, thereby replacing private transfers. Our results suggest that particularly at the initial stage of the crisis, the government could have played an important role in assisting households to weather the negative impacts of the crisis.     

Exploring the Relationship between Operational and Financial Indicators: The Case of Water and Sewer Utilities

ABSTRACT

There is debate in the literature on whether or not general management principles are applicable to the study and practice of public administration. This research responds by exploring how local officials manage the performance of public services with private good characteristics, where general management principles could be embraced for service delivery. The relationship between operational and financial indicators is explored within the functional areas of water and sewer, with the hypothesis that operational outcomes impact financial outcomes similar to private enterprises. Because the findings do not support this hypothesis, the authors conclude that general management principles may not be applicable to all forms of administration given that public cannot be removed from the management of public services even with private good characteristics.     

Latin America’s think tanks: The roots of nonprofit privatization

Conventional development models refer to two sectors, public and for-profit private. Massive growth of nonprofit private activity undermines that picture. Latin American tyink tanks exemplify a nonprofit privatization that has an enormous impact on development and remolds inter-sectoral relationships overall. Four major dynamics account for the spectacular growth of the region’s nonprofit think tanks. Three push factors are state repression, state weakness, and public university problems, and, as epitomized by financial supply, a pull factor is also crucial to attract nonprofit growth. To conceptualize its findings, this article considers public failure theory. Unhelpful regarding the pull factor, the theory otherwise works reasonably well, especially where there is visible movement from the public to the nonprofit sector. Beyond that, the evidence suggests ways to broaden the theory. Even a broadened formulation cannot fully capture the remarkable diversity and vitality of the growth in Latin America’s think tanks. But we are able to identify and analyze the key growth factors that blend together to produce particular institutional and national configurations. Daniel C. Levy is a professor at SUNY-Albany. After earning his Ph.D. in political science at the University of North Carolina-Chapel Hill, he was research associate for five years at Yale University. He has published five books and roughly seventy articles on politics and higher education, especially on Latin America, and on Mexican politics. Levy has done field research in most Latin American countries and has presented lectures and been published on five continents.     

The civil unrest as an obstacle toward financial development in Georgia, 1991–2007

Georgia has been experiencing robust GDP growth since the Rose Revolution despite its formal financial system remaining critically underdeveloped. This goes against a strongly supported proposition that a country’s economic development is followed by a well-developed and efficient financial system. In this paper we first explain the shallow financial deepening in Georgia and show that the economic growth in Georgia has been driven by such determinants as public spending and construction works mainly supported by foreign debt and FDI inflow. This paper further argues that prolonged civil conflict is one of the critical obstacles toward financial development in Georgia. Bank lending activity is associated with high level of uncertainty stemming from recurrent civil war. Newly privatized commercial banks are excessively cautious in expanding their loan assets to private non-financial corporations due mainly to the banks’ inability to precisely assess borrower’s risk involving not only with individual financial soundness but also with political uncertainty.     

Public–private partnerships (ppps) in global health: the good,the bad and the ugly

Global Health Partnerships (ghps) have become ubiquitous within global health governance (ghg). Even before the onset of the global financial crisis public–private partnerships (ppps) were an omnipresent policy tool in global health and in the current austerity climate ppps have been heralded as an effective way to address a growing resource gap in ghg. Despite their omnipresence, ghps have not received adequate attention from critical scholars; few efforts have been made conceptually and theoretically to grasp how ppps are transforming the logic of ghg. We argue that ghps have contributed to the emergence of a complex global health governance architecture in which private solutions (market mechanism) are generally privileged over public approaches. Drawing on Gramscian conceptualisations of public/private, we suggest that the reshaping of the private and public realm inherent to ppps represents a further deepening of the neoliberal management of individuals and populations, allowing private interest to become more embedded within the public sphere and to influence global and national health policy making. This undermines the attempt to improve global health results as the inequitable distribution of social determinants of health, especially poverty and social exclusion, remain the main barriers to achieving health for all.     

ORGANIZATIONAL STATUS AND PERFORMANCE: THE CASE OF THE SWEDISH PHARMACIES

In recent years, studies of the relationship between organizational status and success have focused largely on organizations transferring from the public to the private sectors: pharmacies in Sweden provide a case study of organizational status change in the reverse direction. Popular belief suggests progressive deterioration in the performance of an organization where ownership changes from owner-manager to public corporation, market conditions change from competition to monopoly, and internal management becomes increasingly command orientated. This article explores change in various performance and organizational variables in the National Corporation of Swedish Pharmacies, from its creation in 1971 until 1990. The corporation displays a high degree of stability amongst its senior management team, task specialization amongst employees is low, whilst standardization of working methods is high. Decentralization of authority has occurred over several years. A review of several measures of success, including productivity, financial ratios and innovation, demonstrates substantial progress over the period, comparing favourably with other Swedish public sector organizations. It is concluded that public sector ownership and monopoly supply need not result in deteriorating performance and lack of innovation, provided that criteria for success are clearly stated and properly monitored.     

ORGANIZATIONAL STATUS A PERFORMANCE: SUMMARY OF THE FINDINGS

Hypotheses derived from the public choice and other literatures on the relationship between ownership and performance were tested on ten UK organizations which had undergone status change, within the public sector or between the public and private sectors, in the last twenty years. Results on tests of performance in productivity, employment, and financial ratios against change in status, competition and internal management failed in most cases to support the thesis that change in ownership improves enterprise performance, even in its more sophisticated form where ownership change is assumed to be accompanied by increased competition and improved managerial incentives.     

Deregulation and the decline of public administration teaching in the UK

In 1991 eight polytechnics offered a BA in public administration while five universities provided the degree with either public or social policy. Currently, no higher education institution in Britain offers a BA degree solely entitled 'public administration'. The subject area is, however, offered in 16 higher education institutions under a variety of names that include, in any order, the words 'public', 'management', 'policy' and 'administration'. This paper analyses the reasons for the transformation during the 1990s in undergraduate courses for the public sector. It is argued that these changes do not so much derive from academics, employers or students taking on board an enthusiasm for new public management but are as much the consequences of deregulation of student choice and an expansion in student numbers that has not been matched in financial terms. The consequence has been to increasingly move this sector towards business and management teaching geared to private sector interests and away from its more political and social science roots.     

DOES OWNERSHIP MATTER FOR THE PROVISION OF PROFESSIONALIZED SERVICES? HIP OPERATIONS AT PUBLICLY AND PRIVATELY OWNED CLINICS IN DENMARK

In terms of clinical procedures (to take the example used in this article, hip operations), both public and private organizations provide highly professionalized services. For this service type, our knowledge about ownership differences is sparse. To begin to fill this gap, we investigate how the ownership of hip clinics affects professional behaviour, treatment quality and patient satisfaction. The comparison of private and public hip clinics is based on data from the Danish Hip Arthroplasty Register and the Danish Central Patient Register combined with 20 semi-structured interviews. We find that private clinics employ stronger individual financial incentives and try harder to increase the income/costs ratio than do public clinics. Private clinics optimize non-clinical factors such as waiting time much more than public clinics and have fewer complication-prone patients than public clinics. However, the clinical procedures are very similar in the two types of clinics. Private clinics do not achieve better clinical results, but patient satisfaction is nevertheless higher with private clinics. The implication is that ownership matters for highly professionalized services, but professionalism neutralizes some – but not all – ownership differences.     

Public hospitals as competitors for medicaid revenue: the case study of St. Louis regional medical center

Medicaid revenues may determine whether public hospitals will survive. Public hospitals participate aggressively in the public market competition for their states’ Medicaid dollars. States must decide whether the survival of public hospitals, as providers of last resort to both Medicaid and uninsured patients, is of continuing importance to their Medicaid programs. Cities, if the states were willing, alternatively could voucher uninsured patients and direct Medicaid patients to the private hospitals that would outlive closed public hospitals. In fact, Medicaid's managed care programs already have heightened this competition, by organizing sufficiently large populations of prepaid Medicaid patients to attract networks of private providers to offer discounted prices, in competition with public hospitals for this market.

Although Medicaid has been a comparatively poor payer, nationally, almost half of public hospitals⁷ funding comes from this source of revenue. Urban public hospitals can barely live with Medicaid revenues, but the extent to which they can live without Medicaid revenues is being determined by surprising new turns in market competition for the revenue. A period of expansive and expensive new congressional mandates for the joint federal-state program was followed in the early 1990s by the introduction by the states of Medicaid revenue maximization strategies. The states’ funding levels, the bases for matching federal contributions, were artificially elevated by provider taxes, provider donations, and intergovernmental transfers. The revenue from all these sources was returned to these providers through the Disproportionate Share Hospital subsidy program for Medicaid-dependent hospitals, as soon as the federal revenue match was calculated, based upon the inflated figures. These practices currently are being stymied, and states simultaneously have escalated competitive bidding by private market managed care providers for Medicaid patients. Missouri has been in the forefront of states moving to maximize the federal Medicaid revenue match and to return Disproportionate Share Hospital funds to providers. St. Louis's public hospital, Regional Medical Center, has been weaned off its local government subsidies, as the intergovernmental transfer and DSH enticements compromised the stability of that hospital's revenue picture. Now, unprotected by an integrated healthcare system or other major role in a regional hospital network, this urban public hospital must struggle to survive within its Medicaid managed care competitive market. The question for the state of Missouri is whether perpetuating a future for Regional will ensure its Medicaid patients a traditional caring public medicine alternative as a fallback position, if Medicaid's present foray into the private market goes awry. For Regional and the city of St. Louis, the question is whether they can any longer count upon traditional state Medicaid revenue and financial support.     

Unpacking the Public Private Partnership Revival

This paper examines the recent resurgence of interest in public-private partnerships (PPPs) to provide infrastructure in developing countries. First, the paper demonstrates that there has been a revival of support for private sector participation in infrastructure. Second, the paper argues that this revival differs from earlier attempts to increase the involvement of the private sector in public service provision in a number of respects. In particular, the current support for PPPs is related to an increased availability of global financial capital. Third, the paper considers the implications of this distinct feature of the revival for development.     

Partial Privatisation in Local Services Delivery: An Empirical Analysis of the Choice of Mixed Firms

Mixed public–private firms are increasingly used in several European countries. This paper makes use of survey data from Spanish municipalities to examine the motivations of local governments for engaging in partial privatisation of local service delivery of water distribution and solid waste collection. The empirical analysis indicates that mixed firms emerge as a pragmatic middle way between purely public and purely private production. Indeed, local governments make use of mixed firms when cost considerations, financial constraints and private interests exert contradictory pressures. Political and ideological factors play no significant role in that decision.     

A Leviathan Rejuvenated: Surveillance, Money Laundering, and the War on Terror

Efforts to prevent and preempt further terrorist attacks in the United States and other developed countries have intruded into many spheres of public and private life. This article provides a short assessment of the redeployment of anti-money laundering regimes to combat the financing of terrorism. This expansion of financial surveillance is directed by international organizations and domestic legislation in the belief that terrorists and their financiers may be found, identified and detained. After providing background to the anti-money laundering regime, the article looks at the domestic and extraterritorial application of the USA PATRIOT Act. One conclusion of this analysis finds that a financial panopticon has coalesced out of the wide range of financial and non-financial businesses now required to report “suspicious financial activity.”     

Reframing development and accountability: the influence of sovereign credit ratings on policy making in developing countries

At a time of increased financial volatility, understanding ‘development’ requires that we trace spheres of accountability in order to detect the consequences of shifts in power structures from the public to the private sectors, especially. By focusing on the business of sovereign credit ratings, I argue that ratings have been particularly influential in this context not only because of their function as a benchmark for private investment, but because they now also enter into the calculations of policy makers in developing countries who are increasingly compelled to implement policies that reduce their countries' sovereign risk at possibly high costs for sustained economic growth. I explain that governments' eagerness to signal their potential as reliable capital recipients allows for credit ratings to become a powerful site of governance. This outcome is not justified by the quality of rating agencies' output, but by the subjective power of the notion of risk in a crisis prone environment that shifts accountability—through this disproportional influence of credit rating agencies—from the public to the private realm. The Argentine crisis of 2001 is presented here as a case study that illustrates these dynamics.     

Intersectoral Police Collaboration: An Exploratory View from the States

Modern policing in the United States is best conceived as a joint undertaking between public and private sectors. Over the last several decades there has been a gradual movement away from monopolistic state provision of police services toward a greater reliance on the private sector for protection and security. While the current activities of public and private police are well chronicled in the research literature, little is actually known about the coordination of policing activities across sectors. The purpose of this article is to describe the range of public-private police partnerships that have developed recently in the United States.     

Municipal Socialism Then and Now: some lessons for the Global South

Given the large and growing literature opposed to the privatisation of services such as water and electricity, it is peculiar that so little has been written about the experience of ‘municipal socialism’—a set of roughly analogous historical movements that used local governments to challenge private service delivery and advance ‘socialist’ agendas from the late 1800s to the 1940s. Although primarily a European and American phenomenon, and emerging from different contexts than those prevailing today, municipal socialism found widespread support and transformed many public services. Results were mixed, with some experiments being little more than (pre)Keynesian attempts to revitalise capital accumulation in the face of ‘irrational’ private sector services, but the lessons are important as these experiments provided the first intellectually and politically sustained resistance to privatisation and other prototypical forms of what we now call neoliberalism, and demonstrated the possibility of effective service delivery by the public sector. This paper reviews these experiments, focusing on the experience of the United Kingdom and drawing lessons for contemporary efforts to build alternatives to privatisation in cities in the South, where local-level, socialist-oriented reforms have been relatively strong.     

Local Government Partnerships in Urban Management: The Case of South Asia

The article examines emerging partnerships in local government in South Asia. It argues that public private partnerships at local authority level tend to emerge where existing service deficiencies are greatest and most often involve the private voluntary sector. These partnerships typically function as 'hybrid' concessions where the private operator performs a service and collects a fee but without responsibility for capital investment. Many of the most successful partnerships have operated at the most localised level involving a coalition of stakeholders under local authority co-ordination. However, few partnerships have developed adequate mechanisms for joint planning, management and monitoring of services.     

Strategic management and public organizations: Lessons from the past and prescriptions for the future

The 1990s have become a decade of reflection and rethinking of foundational concepts in the field of public administration. Public adminstrationists are attempting to bring the best of management approaches to bear on the problems facing public organizations. Strategic management has been widely used in the private sector since the 1960s, and has gained increased acceptance in the public sector since the 1980s. It is a management approach that synthesizes much of what management theorists have long recognized as essential to effective management practice. This article traces the development of strategic management and examines what has been learned from the past that will improve future implementation efforts in public organizations.