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Public versus Private Provision of Public Services

Public versus Private Provision of Public Services. Philip Gray PSAS Presentation to Poverty Day October 17 th 2002. Introduction. Public Services and their role in poverty reduction ‘versus’ is a misnomer – public and private play complementary roles

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Public versus Private Provision of Public Services

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  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

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