T07P12 - Public-Private Partnerships as Public Policy

Topic : Policy Design, Policy Analysis, Expertise and Evaluation

Panel Chair : Olivia Jensen - olivia.jensen@nus.edu.sg

Objectives and Scientific Relevance of the panel

Call for papers

Session 1 Public-Private Partnerships as Public Policy

Thursday, June 29th 08:15 to 10:15 (Manasseh Meyer MM 2 - 3 (38))

Discussants

Xun Wu - wuxun@ust.hk - Hong Kong University of Science and Technology - Hong Kong, (China)

Olivia Jensen - olivia.jensen@nus.edu.sg - National University of Singapore LKY School of Public Policy - Singapore

Public-Private Partnership: Empirical Findings in Infrastructure Projects

Matthias Redlich - redlich@wifa.uni-leipzig.de - Competence Centre for Infrastructure at the Institute of Public Finance and Public Management - Germany

Public-Private Partnership (PPP) today is a common public procurement mechanisms to plan, build, operate, maintain and finance infrastructure (European Commission 2004; Grossman 2012; Hill 2003; Hodge/Greve 2005; Rubin/Stankiewicz 2001, Xu/ Morgan 2012). In the last 20 years the phenomenon PPP (Hodge/Greve 2010) therefore has been developed form contested concepts to prevalent practice (Bovaird 2004). Nevertheless, there is often disagreement on the assessments of PPP.

Despite the huge amount of literature published on PPP, there are just few empirical proven findings (Diggs 2012). Reliable evidence can especially be found in high-ranked journals, but these studies often focus on single aspect. Petersen (2011) mentions the categories performance (e.g. Pollock and Price 2008), finance mechanisms (Grimsey and Lewis 2008), technical or legal aspects (Grimsey and Lewis 2002; Bing et al. 2005; Tvarnø, 2006), as well as conceptual and historical formation aspects (Linder 1999; Wettenhall 2003).

 

Against the background of growing literature on PPP synthesizing results is a ‘fundamental scientific activity’ (Mulrow, 1994, p. 597).  In order to obtain general conclusion, it is important to pool the results of existing empirical studies (Denyer/Tranfield/Smart 2003). Hence, in addition to the traditional approach of conducting new empirical studies, the findings of existing primary studies need to be matched. Therefore a systematic literature review can be a powerful and effective approach (David/Han 2004). Many natural and social science fields also have turned to reviews to address important and pressing questions (2009). David and Han limit their systematic literature review to articles published in high-ranked journals, since they „have been through a review process that acts as a screen for quality, allowing us to distill studies meeting a certain level of conceptual and methodological rigor” (2004: 42).

 

Focussing on PPP in infrastructure projects the paper is going to present the results of a systematic literature review. The approach of the paper follows the concept of David and Han (2004) and includes elements of Denyer and Tranfield (2009) as well as of Torchia et al. (2013). The review covers the period 2000 to 2015. Thereby 25 articles presenting empirical findings and being published in high-ranked public management journals can be identified. In the categories “accountability”, “ability to partnership”, “capabilities”, performance” and “risk” the paper amalgamate existing data is going to point what is and what is not known with certainty. Thus, demands for further research will be addressed. Additionally, the paper analysis the definition of PPP used in the different papers and will thereby contribute to a common understanding of the term.

‘Get what you pay for’: The story underneath remunicipalizations in the water sector

Simon Porcher - porcher.iae@univ-paris1.fr - Sorbonne Business School - France

Stéphane SAUSSIER - saussier@univ-paris1.fr - Sorbonne Business School - France

Marion Chabrost - Marion.chabrost@gmail.com - Paris school of Economics - France

This paper focuses on municipal water services in France, an empirical setting which exhibits a mix of public and private provision and a large number of privatizations and remunicipalizations. Collecting data from 1998 until 2014, we first conclude that there is indeed a remunicipalization trend. If the number of remunicipalization cases is not exceeding so much the number of privatization cases on this period, the population concerned by remunicipalizations is exceeding by far the one concerned by privatizations. In order to understand this trend, we examined the performance differential between public and private water provision ceteris paribus. The results show that public management tends to over perform as far as price is concerned while private management is associated with better network performance. The results show a trade-off between prices and investments on the network: lower levels of leakage ratios justify higher prices in private provision. Our results suggest that there are no clear performance gains justifying the observed remunicipalization trend. Other explanations e.g. Political considerations might also play a role.

Cross-sectoral evaluation systems and transformational PPP programs in Latin America: the case of Chile and Peru

Alvaro Artigas - alvaro.artigaspereira@sciencespo.fr - France

Cross-sectoral evaluation systems and transformational PPP programs in Latin America: the case of Chile and Peru

 

Dr. Alvaro Artigas

Sciences Po Ecole Urbaine

 

In a context of strong criticism of government failure rather than market failure, PPPs came to be presented in industrialized countries as a viable -and even preferred - alternatives to bureaucratic and inefficient public services that failed to meet the challenge of universal provision (Savas 1982), quality of service, and more recently sustainability imperatives. Whereas the privatization of state-owned firms appeared as the more viable solution (Cavelty and Sute 2009) it participated of the transformation of the State’s role in the quest of enhancing the efficiency of the public administration and public service provision while respecting borrowing limits and prevent the escalation of public debt (Levi-Faur 2011) Over time, PPPs have spread into a variety of policy sectors and a plethora of arrangements often receding into its analytical value as a concept (e.g. Linder 2000).

 

The combination of private management and financing with public support and the sharing of risks and responsibilities becomes an innovative and alternative model account for the sharp rise of the private sector’s participation in infrastructural development during the 1990s and to a lesser pace after the 2000s, in Latin America in particular. However, public infrastructure investment in the region still dwarfs private investments, and PPPs are but a fraction of public investment in advanced economies. As a region, Latin America received the largest share of the world private infrastructure investment in recent decades – $937 billion out of total of around $2.4 trillion, failing however to sustain the pace after the 2001 Argentinian crisis and PPPs failures. The pervasiveness of inadequate infrastructure in the region and a lack of government commitment to improving it has consistently remained a key barrier to economic growth and human development, irrespective of a clear diagnostic of those areas that could trigger a rapid change (energy, transportation, water provision). 

 

Irrespective of this, the improved ability to undertake PPPs remained a significant change at the policy level and was mostly visible in Chile and Peru -in the Latin American context- currently leading the most infrastructure rankings in the region (MIF 2014, WEF 2015). Our paper will explore, based on a quantitative and qualitative analysis of the development of the energy and water infrastructure in both countries, the process whereby readable yet demanding frameworks for private participation came to materialize for the development of critical urban services (Vittor, J. and Tim S., 2011). It will in particular explore how well-structured evaluation systems were introduced for the energy sector -in particular in the renewable energy subsector- and to a lesser extent for the water sector. It will further explain through a process tracing of policy instruments associated the reasons for this success and sectoral variations.    

Factors Influencing the Performance of a Public Private Partnership in the Digital Services

Wahid Abdallah - wahidabdallah01@gmail.com - BRAC Institute of Governance and Development (BIGD) - Bangladesh

This paper empirically investigates the performance of a Public-Private-Partnership initiative to spread digital public services in Bangladesh.

 

The Government of Bangladesh with a view to reach services to the citizens' doorsteps have initiated digitization of a number of services since 2007 at the lowest administrative tier, the Union Councils. However, the public service delivery system at that local level, led by the local political representatives and supported by local government officials, were already plagued by corruption and other forms of misgovernance and inefficiencies and were deemed to be unfit to provide such services. The Government instead introduced a Public-Private Partnership model where a two-member private entrepreneur team would provide a wide array of public services at a nominal fee, the fee to be set in consultation with the local public administrator. The entrepreneur can also collaborate with the higher order local offices (District or sub-district level offices) to expand the range of the public services they wish to provide. In addition, in order to keep them motivated, the entrepreneurs are allowed to offer private services to the citizens at an unregulated price. The government in exchange has provided them some infrastructural support (electronic equipments) and the monopoly rights to provide the public services at the local level. These service centers are now called Union Digital Centers (UDCs). This is expected to increase access to public service delivery and outreach to a great extent.

 

In an attempt to assess the performance of the UDCs, the government has conducted a census in 2013. This paper utilises this unique census data to examine three aspects of UDC performances: the success of UDCs in providing public services (measured by number of public services delivered), the outreach of the UDC (measured by number of citizens served per month) and finally, sustainability of the UDC (measured by income per month).  We investigated the role of the government support as well as entrepreneur characteristics in determining the UDC performances. We find that government support in the form of number of equipments provided through various programs and initiatives and cooperation from the local public officials has positive impact on the UDC performance. On the other hand, entrpreneurs with high investments and greater visibility perform better. Among others, the gender composition of the team and internet usage of the entrepreneurs significantly affect public service delivery and income, but not outreach. Whereas government promotions are important for public service delivery, private promotion are important for both public services and outreach.

 

The Rise and Fall (?) of Public-Private Partnerships in Israel's Local Government

Eran Razin - msrazin@mail.huji.ac.il - The Hebrew University - Israel

Public private partnerships (PPP) have become a major tool of urban development since the late 20th century, particularly BOT (Build-Operate-Transfer) concessions of various types and the use of municipal land to leverage private development beneficial for the local economy. Their growing popularity was linked to both New Public Management approaches and public finance constraints. However, the 2008 global crisis might have reduced the enthusiasm to implement PPP, either because of evolving critical attitudes towards privatization and risk sharing, or of low interest rates that reduce the need for private sector financing.

Our study of municipal-private partnerships in Israel examines motives for engaging in PPP, the changing balance of economic development versus social services in the composition of projects, conditions for success and lessons from failures and buybacks. In addition to a survey of PPP in municipal service and development projects in the last decade, we examine centrally regulated BOT contracts for sewage treatment plants, and two light rail projects led by the central state: Jerusalem's BOT concession and Tel Aviv's one based on traditional procurement. The study reveals increasing awareness to the weaknesses of PPP, particularly in adjusting to uncertainties, and lower appeal of PPP in an era of low interest rates. However, it does not identify a long-term ideological retreat or a long-term process of "remunicipalization" of local services. Leveraging development by municipal land requires a sufficient amount of municipal land, faces regulatory constraints, and is particularly beneficial where real estate values are high. BOT contracts are unattractive for fiscally sound cities, aware of long-term rigidities of such concessions, but this may change in a context of rising interest rates and increasing pressures on public budgets. BOT contracts are not viable for the weakest municipalities. They are most appealing for cities with medium levels of financial strength that show a greater inclination to engage in PPP that include BOT concessions leveraged by municipal land.

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