WHY DO LOCAL GOVERNMENTS PRIVATIZE THE PROVISION OF WATER SERVICES? EMPIRICAL EVIDENCE FROM SPAIN

Why do some local governments privatize water services, while others opt for public management? Economic literature has been unable to demonstrate that private management is more efficient than public management, so there must be other reasons that lead governments to privatize the service. But what are they? This paper presents the results of a study that analyses the factors behind the privatization of water services with data from 741 municipalities located in the South of Spain over a period dating from 1985 to 2006. A discrete choice model analyses the influence of each factor on the likelihood of privatization. One of the novelties of this paper is that we take the value of the explanatory variables at the time when water services are privatized. Among our findings, it is worth highlighting the importance of the size of municipalities, their financial burden and the neighbouring effect.     

REPRESENTING CUSTOMERS’INTERESTS: THE CASE OF THE PRIVATIZED WATER INDUSTRY IN ENGLAND AND WALES

Privatization has been one of the most important and controversial policy initiatives to emerge in the UK over the last decade. However, to date there has been little attempt to assess the impact of privatization on customers, despite the fact that much of the justification for the privatization of the public utilities was couched in terms of the benefits it would bring for customers. In the case of the water industry opportunities for competition are virtually non-existent, and the ten regional water authorities were privatized with their monopoly position intact. Consequently customers’interests have been represented and protected through new regulatory arrangements operated by the Office of Water Services. The purpose of this article is to offer some provisional assessment of the effectiveness of these new regulatory arrangements. In doing so, the article regards the model of private sector consumer sovereignty as inappropriate given the continued absence of competitive arrangements for the representation of customers’interests against some of the criteria currently being discussed in the development of more consumer-oriented approaches to the delivery of public services.     

Privatization in developing countries: ideal and reality

In both developed and developing countries, governments finance, produce, and distribute various goods and services. In recent years, the range of goods provided by government has extended widely, covering many goods which do not meet the purist's definition of “public” goods. As the size of the public sector has increased steadily there has been a growing concern about the effectiveness of the public sector's performance as producer. Critics of this rapid growth argue that the public provision of certain goods is inefficient and have proposed that the private sector replace many current public sector activities, that is, that services be privatized. Since Ronald Reagan took office greater privatization efforts have been pursued in the United States. Paralleling this trend has been a strong endorsement by international and bilateral donor agencies for heavier reliance on the private sector in developing countries.

However, the political, institutional, and economic environments of developing nations are markedly different from those of developed countries. It is not clear that the theories and empirical evidence purported to justify privatization in developed countries are applicable to developing countries.

In this paper we present a study of privatization using the case of Honduras. We examine the policy shift from “direct administration” to “contracting out” for three construction activities: urban upgrading for housing projects, rural primary schools, and rural roads. The purpose of our study is threefold. First, we test key hypotheses pertaining to the effectiveness of privatization, focusing on three aspects: cost, time, and quality. Second, we identify major factors which affect the performance of this privatization approach. Third, we document the impact of privatization as it influences the political and institutional settings of Honduras. Our main finding is that contracting out in Honduras has not led to the common expectations of its proponents because of institutional barriers and limited competitiveness in the market. These findings suggest that privatization can not produce goods and services efficiently without substantial reform in the market and regulatory procedures. Policy makers also need to consider carefully multiple objectives at the national level in making decisions about privatization.     

Privatization,efficiency and market failure : transforming ecuador's public sector

Much of the privatization that is occurring in Latin America is leading to improved efficiency. However, privatization in areas where markets do not yield efficient solutions, for example of public goods, like light houses, natural monopolies, mainly utilities, and goods with externalities, like education, can lead to lower output and higher costs in the long run. This paper first presents an outline of the shift in development theory with respect to the role of the public sector. It then examines the growth of Ecuador's public sector and its current debate on how privatization should proceed. It concludes that while careful privatization can be positive, privatizing natural monopolies like the electric utility and/or quasi-public goods, like highways are likely to be detrimental to long run economic development. In order for Ecuador's economy to continue to develop, the public sector still needs to play a significant role in developing human capital and physical infrastructure.     

Privatization and the Working Conditions of Health Care Support Staff

Using an assisted survey approach, we compare health care service employees' perceptions of work between public and privatized health care settings. Results indicate that laundry, maintenance, food service, and housekeeping staff employed by privately managed medical institutions have more negative perceptions of job rewards than their public sector counterparts, with no difference in perceptions of supervisor support, work stress, autonomy, and opportunity. A supplementary analysis comparing three organization types: pure-public, pure-private, and public-private shows that workers perceive higher work stress and lower rewards in public-private organizations, while workers at pure-private organizations perceive low rewards, low supervisor support, and low opportunity. Our interpretation is that privatization lowers workers' perception of rewards in completely privatized organizations and in public organizations that privatize a proportion of services.     

Regulation in an Episodic Policy-Making Environment: The Water Industry in England and Wales

This article describes and analyses the evolving regulatory game in the post-privatized water industry. It highlights a regulatory environment that is more complex than that which existed under public ownership, and an industry which is subject to heavier regulation in the private sector than it was in the public sector. There has been erosion of the strict public/private divide following privatization. The article highlights an episodic and seemingly incongruous policy-making environment that defies consistent characterization: sometimes private consensus is the main feature and sometimes it is public conflict. It also illustrates that while there are two broad-based constituencies of interest active in the water sector — cost and environmental — the composition of these coalitions mutates depending on the issue being considered. Indeed, there are occasions when core constituency participants 'defect' and join the 'opposing side'.     

THE COSTS AND RETURNS OF THE PRIVATIZATION OF NATIONALIZED INDUSTRIES

The sale of public sector industry has become a central plank of UK public policy. This paper concentrates upon the most contentious area of the opportunity cost of share sales. The nature of these costs is related to the revealed objectives of the policy, and the extent to which they differ from expected costs is identified. The nature of the benefits forecast for privatization is explod and questions posed concerning the balance of costs and benefits in current policy. Particular attention is paid to the distribution of returns on the share issues in privatized businesses and parallels are drawn with issues in the private sector.     

THE PUBLIC MANAGEMENT CHALLENGES OF CONTRACTING WITH NONPROFITS for SOCIAL SERVICES

ABSTRACT

States and municipalities increasingly pursue privatization as a way to deliver public goods and services because of two expected outcomes, reduced costs and quality improvements. Several reasons are frequently cited for these anticipated benefits ranging from market competition to increased management flexibility and discretion to fewer rules and regulations. One policy area in which government has privatized many services through contracting with nonprofit organizations is social services. Contracted services are as diverse as providing shelters for the homeless, vocational education and job retraining, domestic violence services, refugee esettlement, child and elder abuse services, and food banks. A proliferation of public administration and nonprofit organizational scholarship has examined a range of issues associated with the government-nonprofit social service contracting relationship, not the least of which are topics related to management, measurement, and accountability. This article examines the public management challenges and implications of contracting with nonprofit organizations for the delivery of social services.     

Public Sector Commissioning: Experiences of Voluntary Organizations Delivering Health and Social Services

The perceived benefits to users and beneficiaries of voluntary organizations delivering public sector services have been well documented and include the engagement with parts of society that the state cannot reach, personalized service delivery, and improved services. There is a lack of clarity, however, as to whether these perceived benefits are being realized. This article presents the experiences of voluntary sector organizations involved in public sector commissioning. The research suggests that the public sector is limiting the voluntary sector's engagement in service design and performance monitoring. These findings raise questions about the role of the voluntary sector in public service provision.     

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?     

Representative Bureaucracy in the Public Service? A Critical Analysis of the Challenges Confronting Women in the Civil Service of Ghana

In the public administration literature, the debate concerning the representation of minorities in the public bureaucracy continues to attract attention. The idea is that passive representation may lead to active representation with the later helping to develop policies and programs that will benefit minorities. Consequently, a number of governments have been implementing policies to enhance the involvement of minorities in public services. The Ghana government has not been left out in this endeavor. Since 1957, it has continued to institute measures to ensure a fair gender representation in the bureaucracy. This notwithstanding, the upper echelons of the bureaucracy continue to be dominated by males despite the over representation of women at the lower levels. What are the challenges confronting women in the public sector that make it difficult to achieve active representation? In this article, we examine the challenges confronting women to achieve active representation from a representative bureaucracy perspective.     

Analysis of Changes in External Accountability and Accounting in Privatized Industries: A Case Study of British Gas

This study investigates the consequences of regulation for organizational and accounting change in privatized industries by means of a case study of the gas industry, with particular emphasis on issues of accountability and the role of accounting information. The paper extends Stewart and Ranson's (1988) discussion of the distinctive conditions which apply to public and private sector organizations by highlighting an important interim phase in relation to privatized industries, where public service obligations coexist to varying degrees with private sector objectives. The extension of their framework of public and private sector models to include a new 'commercial' model provides the basis for an analytical framework encompassing the three cultures — that is, public service, commercial and competition — which is used to understand organizational change in the gas industry.     

Intensity of innovation in public sector organizations: The role of push and pull factors

The public sector is under pressure to provide new public services with increasingly scarce resources. In response, practitioners and academics have called for more innovation in the public sector. Our understanding of sources of innovation within public sector organizations, however, is inadequate. Motivated by this gap, we develop a conceptual model of how push and pull sources enable innovation within public sector organizations. Key to our theory is that push and pull sources of innovation are enabled by innovation capabilities. Five hypotheses are tested using cross-country survey data from European public sector organizations. Empirical analysis offers strong support for the central role played by innovation capability in enabling push and pull sources of innovation within public sector organizations. This article advances knowledge of the sources of innovation in the public sector and extends theorizing on push and pull mechanisms by examining their relevance to innovation in a public sector context.     

Governance in Public and Private Management

This article analyses the effect of governance in the delivery of public services, and the advantages of collaboration with the private sector in the provision of these public services. The article is not intended to be the conclusions drawn from an empirical study, but rather is based on the experience of a practitioner who has worked as a civil servant in the public sector and as a manager in the private sector. The advantages of private participation are listed, without prejudicing the role of regulator which must be exercised by the public sector.     

Constructing the Market: Commercialization and Privatization in the Royal Mail

The public sector in the UK has become the object of constant reform and change as part of the government's project to increase the remit of the private sector and the role of markets. There is much debate about the effect such a move to market relations has on public services. There is increasing concern with the way market–based reforms are linked to a new pattern of organizational structure and strategy that negates and/or opposes the traditional political processes associated with the public sector. This article focuses on the case of the Royal Mail to explore how such a transformation is both complex and contested. It reveals how 'the market' within the public sector is to a large extent politically constructed, and that the public–private dichotomy over–simplifies what is a complex process of negotiating meaning, forming alliances, lobbying for support, handling conflict and exerting influence. It demonstrates how various readings of 'the market' emerge, and that any solutions of how to become more commercial can be the result of political machinations. The implications of this analysis go beyond Royal Mail and can be generalized across the public sector.     

STATE REGULATORY CAPACITY: EXPERIENCES FROM PUBLIC SECTOR REFORMS IN NORWAY

State regulatory capacity is being threatened by internationalization, commercialization and persistent demand for public services. The article addresses the overarching question of how the state is changing due to recent public sector reforms. By studying changes in the regulation of the health care sector and the food sector in Norway, the article challenges the assumption that recent public sector reforms have necessarily led to a decline of the central state's regulatory strength. The conclusions are that the central state level has in fact been strengthened by regulatory reforms, by transferring authority to the state level and by enhancing the central administration's co‐ordinating and regulating capacity.     

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

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

Public Services, Quangos And Women: A Concern For Local Government

The past eighteen years have witnessed a shift in the locus of much public sector service provision from elected and heavily regulated local government to the more opaque, appointed sector of quasi-autonomous non-governmental organizations (QUANGOs). This shift has been the basis of much debate about the nature of democratic accountability and whether the users of public services are empowered by such decentralization. What has yet to be considered is how the displacement of local authority representation and service delivery may affect different groups of service users. This article is concerned with such issues in relation to women as consumers of public services who, from genuine political as well as expedient motivations, have been relatively well represented by local authorities. The concern here is that as decision making moves away from public view, the need to be seen to accommodate difference is lost, and representative diversity will suffer.     

Crucial relationship between the privatized sector and the generic private sector in post-communist privatization: Determinants of economic performance

This article looks at the issue — largely neglected in the transition literature — of the relative weights of the privatized sector and the generic private sector (of de novo private firms) in the emerging private sector of post-communist economies in transition. The present writer posits that the relative weight of each in the aggregate share of a private sector (generally expanding over time as transition progresses) strongly influences economic performance, both during correctional recession and during recovery and expansion period. Another, interrelated issue considered here is the interaction between the evolving institutional framework and the expansion of the generic private sector, that is the most dynamic one in the transition economy. It is true that the interaction between institutions and performance has been a staple of a very large number of books, articles, and papers.However, this article concentrates on one component of a private sector only, that is the generic private sector. But at the same time it looks beyond the ‘Holy Trinity’ of transition (stabilization, liberalization, and privatization) towards a wider institutional framework of political liberty, law and order. The foregoing wider framework, and the emerging general trust, matters as much — if not more — for the present writer as the standard transition program.It is the relative dynamics of both components of the private sector, affected by both standard transition programs and the above-mentioned wider institutional framework, that is of primary importance for the economic performance in post-communist transition. In the last part of the article I will try also to answer, tentatively, the question under which circumstances the wider institutional framework may emerge in the transition process.