Public versus Private Provision of Public Services

1
Public versus Private Provision of Public Services

• Philip Gray
• PSAS
• Presentation to Poverty Day
• October 17th 2002

2
Introduction

• Public Services and their role in poverty
  reduction
• versus is a misnomer public and private play
  complementary roles
• Policy, regulation and financing roles of public
  sector
• Residual role for public sector service provision?

3
Public Services and Poverty Reduction

• Infrastructure - Voices of the Poor, The lack of
  basic infrastructure particularly roads,
  transportation and water is seen by the poor as
  a defining characteristic of poverty (Narayan,
  2000)
• Health-care Public health a key determinant of
  economic growth
• Education development of human capital and
  essential pre-requisite for operation in modern
  economy and society

4
Complexities

• Different forms of private participation
  service contracts to concessions to sales
• Liberalization of service provision
• Financing issues subsidies, user fees,
  insurance
• Externalities and public goods

5
Roles of Public Sector
Policy setting rules
Financing covering externalities and
affordability
Service Provision
Regulation Monitoring, Enforcing and
Updating rules
6
Roles of Public Sector
Regulation Monitoring, Enforcing and
Updating rules
Policy setting rules
Financing covering externalities and
affordability
Service Provision
7
Failures everywhere what to do?

• Market failures externalities, public goods,
  information asymmetries can be solved through
  mechanisms other than service provision
• Public failures public service provision poor
  incentives, soft budget constraints, corruption -
  see Bureaucrats in Business
• ?Middle Ground Better focus of public sector on
  policy, regulation and targetted subsidies

8
Examples

• Contracting Out Public sector financing of
  private provision monopoly with better
  incentives and regulation (e.g. Cambodia health)
• Vouchers Public sector financing of private
  provision liberalized sector (e.g. Chile)
• Charter Schools Public Provision with choice
  (e.g. DC education)
• Public financing of connections OBA schemes, eg
  Peru telecoms, Guatemala power, Paraguay water

9
Cambodia Health Care
10
of poor people sick in the last month using
health facility
11
Change in key indicators