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Evaluating the performance of local SoEs as output‐maximizing entities: The case of Friuli Venezia Giulia
Abstract
Publicly owned private‐law organizations represent a sort of a hybrid between pure‐public and pure‐private management forms, and a rather successful one, at least if one considers the ongoing success that such organizations encounter in many European countries, especially at the local level. Economic theory has devoted scant attention to the reasons that may confer a competitive advantage to public enterprises, vis‐à‐vis both entirely privatized companies and traditional public bureaucracies. The paper develops a conceptual framework to systematically evaluate the performances of local SoEs in relation to their ability to achieve policy goals. By considering SoEs as output‐maximizing organizations rather than profit‐maximizing ones, the proposed approach entails an interactive dialogue between evaluators, policymakers and managers to deliver better evaluation outcomes. The methodology is applied to assess the performance of a sample of local SoEs owned by the Region Friuli Venezia Giulia in Italy in an effort to support policymakers in deciding whether to maintain its shareholding participations or divest them, that is, privatizing the public services involved.
... SOEs are companies totally or partially owned and controlled by governments, that have to achieve multiple objectives, not exclusively focusing on making profit, but also pursuing social and political goals (Yeyati & Negri, 2023). They especially activate at the local level and depict a mixed management form between pure-public and pure-private (Massarutto et al., 2021). The motivation behind state ownership has shifted over time, often driven by crises and eventseconomic crises, pandemics, and wars (PwC, 2015). ...
... As their priority remains social and political goals, the economic performance of SOEs is largely seen as mediocre (Yeyati & Negri, 2023). Poor performance of SOEs can hinder the delivery of essential public services in important economic sectors, leading to a fiscal burden, a source of fiscal risk, or even distortions in the functioning of the market (Massarutto et al., 2021). Moreover, the differences in the way SOEs are managed in different countries and the degree of state control over SOEs' decisions and operations could have relevant implications for worldwide economic development and growth (OECD, 2019). ...
... Since its inception, numerous scholars have studied the performance of SOEs and have advanced suggestions and factors that significantly influence their results. While Chitiga-Mabugu et al. (2022) demonstrate that the deteriorating SOEs performance has substantial negative ramifications on the whole economy, Massarutto et al. (2021) developed a conceptual framework to systematically evaluate the political performances of SOEs. Bozec et al. (2002) conclude, based on a study performed in the Canadian context, that looking at goals is most important when analyzing the performance of SOEs since their level of profitability might be diminished by the aim of achieving other social or political objectives. ...
In the context of recent reforms affecting the public sector, maximizing good governance and performance of state‐owned enterprises is a major challenge for governments. The aim of the study is to provide a systematic and holistic review of the literature related to corporate governance and performance of state‐owned enterprises, to highlight and clarify the evolutionary trajectory of the field. To achieve the research objective, 409 publications that mention the term state‐owned enterprises and performance, indexed in the Web of Science database between 1997 and 2022 were analyzed by applying multiple bibliometric analysis methods and content analysis. The citation and co‐citation analysis results offer an outline of the most influential articles and journals, and links between authors, and provides a thematic classification. Through keyword co‐occurrence analysis, the paper highlights the research trends in the literature concerning state‐owned enterprises and proposes future research directions.
... Apesar da importância da empresa controlada parcial ou totalmente pelo Estado, entre a maioria dos pesquisadores e formuladores de políticas no mundo ocidental, tornou-se convenção o fato de que as empresas estatais são menos eficientes do que as empresas privadas (Lazzarini, 2015). Todavia, pesquisas anteriores que analisaram o desempenho das empresas estatais em relação as empresas privadas, se concentraram principalmente na análise do desempenho destas empresas, utilizando como métrica de avaliação indicadores financeiros e econômicos, que não são adequados para as entidades estatais, tendo em vista que não levam em consideração as características intrínsecas da propriedade estatal e seus e múltiplos objetivos (econômicos e sociais) (Peng et al., 2016;Jakob, 2017;Massarutto et al., 2020). ...
Esta pesquisa objetivou analisar a influência da propriedade estatal no desempenho das firmas e foi desenvolvida com base nas teorias de Direitos de Propriedade, Custo de Transação e Agência, que em alinhamento, proporcionaram um panorama mais preciso sobre este tema dinâmico. O exame foi conduzido através de teste de hipótese da relação entre a Propriedade Estatal (PE) e o desempenho das empresas representado pelo Valor Adicionado Líquido. A relação estatística foi realizada através da regressão em painel Pooled MQO, e, como complemento empírico, utilizou-se também a Regressão Quantílica. Os resultados das regressões pooled MQO e Quantílica convergiram e se complementaram, evidenciando que a Propriedade Estatal (PE) detém relação positiva e significante com o desempenho das empresas analisadas, contribuindo assim para a melhoria da geração de valor adicionado nestas entidades, até um certo limite. A principal contribuição do estudo foi a de demonstrar empiricamente a influência da propriedade estatal no desempenho das empresas e trazer para dentro do debate teórico o Estado em sua forma empresarial.
The paper depicts, in the Italian case, the interconnections between two themes: bribery and anti-corruption policies, on the one hand, and the role of public controlled entities, on the other. Italy turns out to be an interesting case study because, on the one hand, it is among the worst performing countries in the G7 and the EU members in terms of corruption and, on the other, it has experienced a strongly proliferation of Public owned enterprises (POEs) during the last two or three decades, involving nearly all activity sec-tors of the economy. This process is deemed to have weakened the chain of control on shared units, delegating relevant financial and political decisions to a milieu of ambiguity and uncertain accountability (the ‘escape' argument). A progressive change of direction occurred more recently, when corporatized public enterprises have been submitted to specific and increasing limits, including transparency and anti-corruption policies. The anticorruption package, adopted in Italy starting with 2012, has promoted important steps in this direction, yet the effects of these new measures have not been resolutive, and many challenges are still open.
Practitioners often expect service delivery by municipally owned corporations (MOCs) to differ substantially from delivery by municipal bureaucracy. However, research into the circumstances under which municipal corporatization is effective is scarce. We investigate determinants of MOCs’ performance based on a questionnaire sent to all Dutch MOCs, finding no evidence that many expected predictors of performance matter for performance. Key factors driving MOCs’ performance relate to size, resource access, and the interaction between their multiple principals. We suggest that in studying local corporatization, researchers should look less at traditional principal–agent conflict and more at intermunicipal coordination.
This report builds on the OECD’s longstanding work measuring government support in agriculture, fossil fuels, and fisheries in order to estimate support and related market distortions in the aluminium value chain. Results show that non-market forces, and government support in particular, appear to explain some of the recent increases in
aluminium-smelting capacity. While government support is commonly found throughout the aluminium value chain, it is especially heavy in the People’s Republic of
China and countriesof the Gulf Cooperation Council. Looking across the whole value chain also shows subsidies upstream to confer significant support to downstream activities, such as the production of semi-fabricated products of aluminium.
Overall, market distortions appear to be a genuine concern in the aluminium industry, and one that has implications for global competition and the design of trade rules disciplining government support
In recent years, significant changes have produced in the organisational culture of the public sector, bringing accountability and sustainability to the foreground and highlighting the definition of corporate social responsibility (CSR) in public administrations. In this respect, state-owned enterprises (SOEs) are well placed to provide an important example to other companies and society and could be of crucial importance in the promotion and development of socially responsible policies. With these considerations in mind, we analyse the state of research into the practice of CSR within SOEs, seeking to identify the main theoretical and empirical contributions made in this respect, that it will be a useful base for studies in the future. Our results show that research attention has been paid to this issue but significantly less than the large body of work carried out in this respect in the private sector. Most of the studies we identify are descriptive, although a growing body of explanatory research is now appearing. Few studies have been made of the impact of CSR practices on users and this constitutes a possible area for research in the future. Our review shows that research into CSR in SOEs is particularly significant in countries where the state has a strong presence in these companies.
Innovation activities create substantial firm value, but they are difficult to manage owing to agency risk which is commonly thought to result in shirking, hence underinvestment in innovation. However, agency risk can also create inefficient allocation of resources among innovation activities, on which the literature provided limited understanding. We examine an important outcome created by agency risk—that agents pursue the quantity of innovation at the expense of the novelty, and investigate how it is influenced by corporate and public governance. We theorize that improved corporate governance tools, including better alignment of agents’ private incentives and stronger monitoring, and high-quality public governance reduce such agency risk in state-owned enterprises (SOEs). Furthermore, higher-quality public governance enhances the functioning of corporate governance tools in further reducing such agency risk in innovation. We test our theory by examining SOEs in China that responded to state’s pro-innovation policies relying disproportionately on quantifiable outcomes (e.g., patent counts) for assessing innovation performance. Our difference-in-differences estimates provide overall support for the hypotheses. These findings provide new insights on how agency risk affects innovation by distinguishing the consequences on quantity and novelty of innovation and on how conventional corporate governance tools shaping innovation is dependent on public governance.
We briefly review recent advances in the empirical analysis of the privatisation and inter-municipal cooperation of local public services and discuss the potential of these studies. The core issues examined include the identification of factors driving delivery choices and the effects of privatisation and cooperation on service provisions. In addition to reporting the specific empirical findings of each study, we highlight the innovative methodologies that they each adopt. Finally, we outline a number of potential avenues for further research.
Municipally owned corporations (MOCs) are increasingly utilised to provide local public services, but little remains known about their efficiency and effectiveness. In this article, we offer a typology of MOCs, explore the variables that affect their behaviour, and perform a systematic review of public administration articles published between 2001 and 2015 on their efficiency and effectiveness. We find that MOCs are often more efficient than local bureaucracies in the provision of services such as refuse collection, water distribution, and transit services, although they also have high initial failure rates. We conclude that municipally owned corporations are a viable means for delivering some local public services for localities capable of initiating and managing complex contracts. In light of the scarcity of literature on this topic, our conclusions remain tentative, and we encourage additional research into this growing phenomenon.
Under recurrent procurement, the awarding of a contract to a firm may put it in an advantageous position in future tenders, which may reduce competition over time. The objective of this paper is to study the dynamics of competition for tendered contracts, focusing on factors that may generate incumbent advantage. Particular attention is given to learning economies, sunk costs of entry and switching costs for the procurer. The paper then applies these insights to analyse empirically the evolution of competition in the market for local bus services in London.
This study investigates the influence of service, political, governance and financial characteristics on municipalities’ choices of four service delivery modes (in-house, inter-municipal cooperation, municipality-owned firm and private firm) in the Dutch local government setting. The results show that as a service involves more asset specificity and more measurement difficulty, the likelihood that municipalities contract this service out is lower. Also, although some differences in preferences are found between boards of aldermen and municipal councils, for both political bodies a more right-wing political orientation is shown to be positively related to privatization of services. Furthermore, contracting out is also shown to be related to the governance model of municipalities, as services of municipalities that (in general) put relatively less emphasis on input, process and output performance indicators, and more on outcome performance indicators, are more likely to be privatized. Finally, the results also show that services of municipalities that have a better financial position are less likely to be contracted out to a private firm.
A growing number of city governments worldwide engage in sustainability reporting, voluntarily and responding to legal pressures. Diverse practices emerged based on unique choices concerning formats, periodicity, authorship and dissemination efforts. Such design questions and associated outcomes are highly relevant for
practitioners yet unaddressed in standard guidelines and most prior research that primarily concern content and conjectured reporting benefits. This article presents a framework suited to assessing real-life practices and outcomes. An exploratory evaluation in Amsterdam, Basel, Dublin, Freiburg, Nuremberg and Zurich suggests that sustainability reporting can benefit organizational change, management and
communication yet also lead to ‘fatigue’ and discontinuation.
The movement towards reforming public utilities that developed during the 1980s has largely contributed to placing institutions high on the agenda of economists. Indeed, difficulties encountered in implementing successful change in the provision of essential goods and services revealed the importance and influence of the institutional background. Although most of the initial attention of reformers focused on the most profitable sectors among network industries, namely: telecoms, electricity, and gas, the importance of water and sewerage and the need to find ways to provide them to large segments of the population that do not have access to safe water around the world was increasingly acknowledged.
State-owned enterprises represent approximately 10% of global gross domestic product. Yet they remain relatively underexplored by management scholars. Firms have often been viewed dichotomously as either state owned or privately owned. Today, however, we encourage a more nuanced view of state-owned enterprises as hybrid organizations, in which the levels of ownership and control by the state can vary. Drawing on 36 cases from four industries in 23 countries, we lay the groundwork for a richer understanding of state-owned enterprises by management scholars in the future.
In times of rising expectations and decreasing resources for the public sector, performance management is high on the agenda. Increasingly, the value of the performance management systems themselves is under scrutiny, with more attention being paid to the effectiveness of performance management in practice. This new edition has been revised and updated to examine:
(1) performance in the context of current public management debates, including emerging discussions on the New Public Governance and neo-Weberianism;
(2) the many definitions of performance and how it has become one of the most contested agendas of public management;
(3) the so-called perverse effects of using performance indicators;
(4) the technicalities of performance measurement in a five step process: prioritising measurement, indicator development, data collection, analysis and reporting; and
(5) the future challenges and directions of performance management
Performance Management in the Public Sector 2nd edition offers an approachable insight into a complex theme for practitioners and public management students alike.
We propose a novel approach to theorizing hybridity in public and nonprofit organizations. The concept of hybridity is widely used to describe organizational responses to changes in governance, but the literature seldom explains how hybrids arise or what forms they take. Transaction cost and organizational design literatures offer some solutions, but lack a theory of agency. We use the institutional logics approach to theorize hybrids as entities that face a plurality of normative frames. Logics provide symbolic and material elements that structure organizational legitimacy and actor identities. Contradictions between institutional logics offer space for them to be elaborated and creatively reconstructed by situated agents. We propose five types of organizational hybridity – segmented, segregated, assimilated, blended, and blocked. Each type is theoretically derived from empirically observed variations in organizational responses to institutional plurality. We develop propositions to show how our approach to hybridity adds value to academic and policy-maker audiences.
Public enterprises are policy instruments that are “rediscovered”. In parallel, a separate scientific literature exists on entrepreneurship in the public sector but has not focused on public enterprises. This article suggests that a new perspective linking both streams of research could lead to an improvement in the understanding of the role as instruments of economic policy that public enterprises could play, in particular in the new context emerging after 2008. The paper advocates that the focus of research should not be on the governance of these institutions or the particularities of ownership but on public entrepreneurship.
Public enterprises (PE) are important players in the global economic arena. Recent empirical evidence confirms that more than 10% of the giant multinationals are government owned; that European PE successfully compete with their private counterparts in network industries such as electricity, gas and telecommunications; and that worldwide PE are found on both sides of the market for corporate control, i.e. they are not just targets of privatization, but also acquirers of private and public firms. In this context, three research themes emerge and are represented by papers in this special issue of the Journal of Economic Policy Reform: entrepreneurship and managerial motivation in PE; measurement of users’ satisfaction and accountability; relations of PE with regulators and governments.
Tackling the key topics of reform and modernization, this important new book systematically examines performance in public management systems. The authors present this seminal subject in an informative and accessible manner, tackling some of the most important themes.
Performance Management in the Public Sector takes as its point of departure a broad definition of performance to redefine major and basic mechanisms in public administration, both theoretically and in practice. The book situates performance in some of the current public management debates; discusses the many definitions of ‘performance’ and how it has become one of the contested agendas of public management; examines measurement, incorporation and use of performance information; and explores the challenges and future directions of performance management.
A must-read for any student or practitioner of public management, this core text will prove invaluable to anyone wanting to improve their understanding of performance management in the public sector.
The quality of institutions is at the core of the differences in the growth of income and productivity of nations. A growing body of evidence shows how this is also true at the firm level. After taking stock of earlier theoretical and empirical literature on the efficiency of state-owned versus private enterprises, while we consider ownership as the core internal governance mechanism of firms, we add quality of government as a determinant of the external institutional environment. To disentangle the effect of internal and external institutions on firms' productivity, we use different sets of ownership and institutional environment indicators.
After having identified the top 350 private, state-invested (i.e. partially state-owned) and state-owned enterprises in the telecommunications industry in EU28 and in more than 60 other countries between 2007 and 2015, we empirically investigate models of firms' productivity augmented with ownership and quality of government. Our findings suggest that, after controlling for the regulatory and competitive conditions at the country level, on average, public ownership has a negative impact on firm-level TFP. This effect is however mitigated by high external institutional quality and even reversed in some countries with a particularly favourable institutional environment.
Cambridge Core - Industrial Economics - Modern Economic Regulation - by Christopher Decker
Reasoning is the process that human beings use to move from what they know to what they do; that is, from thought to action. There are two primary types of reasoning: defensive and productive. Defensive reasoning is characterized by the following patterns: The premises that people develop for their causal explanations are tacit; they are not made explicit. The inference processes by which people move from premise to conclusion are also tacit. The data they use to generate their premises and conclusions are “soft”; that is, the data are not subjected to verification. The logic used to test conclusions is the same as that used to produce them.
Unsatisfactory results from privatisation have caused local governments to seek alternative reforms. Inter-municipal cooperation, mixed public/private delivery and contract reversals are three alternatives that have gained traction in the last decade. These alternatives help local governments manage markets for public service delivery as a dynamic process. They maximise government/market complementarities and address a wider array of public goals beyond cost efficiency concerns. The alternative reforms show how local governments balance citizen, labour and community interests to ensure efficiency, coordination and stability in public service delivery.
This book explains the increasing demand for evaluation as a result of the increasing frequency of reforms to local services, influenced by the New Public Management doctrine, the severe austerity policy in many European countries, and the wish to increase quality and reduce costs of public services, especially at the local (sub-national) level. Positioned at the interface of local services and evaluation research, it will enable the utilization of evaluation-generated knowledge in evidence-based policy making by focusing on the lessons learned from evaluation of local service delivery. It encompasses local public and social services (including waste, water, public transport, healthcare, education and eldercare) and examines the hypothesis that there is a North-West–South-East divide in Europe in terms of the evaluation of local service reforms. Particular attention is devoted to the explanatory function of evaluation. Providing fresh insight into the functioning of local government machinery in contemporary Europe, this book will appeal in particular to practitioners and students of local government, public economy, public administration and policy.
This article proposes a quantitative data-based assessment of the onshore wind auctions conducted in Italy from 2012 to 2016. Our objective is to provide new insights in the ongoing debate on policy measures to promote renewable energy sources. Italian wind auction design is examined by firstly investigating its overall outcomes in terms of cost efficiency and policy effectiveness. Determinants affecting awarded tariffs are then empirically analysed further to explore the role of project-related and firm-specific factors as well as different auction design elements. The extreme simplicity of the auction design undoubtedly has promoted competition, encouraging many project developers to bid and reducing support both in static and dynamic terms. Results provide evidence that localisation factors did not constitute a competitive constraint. From a policy perspective, the administratively setting of ceiling prices is a major issue when wind resources are widely available and auctioned capacity is not sufficiently high. While not limiting competition, the effects of pre-qualification criteria on the realisation rate deserve further analysis. However, doubts emerge on the policy effectiveness of the current support scheme which makes difficult to control the total amount of support provided thus likely causing stop-and-go cycles of financing and potentially favouring distorted bidding behaviour.
Scholarly empirical studies on factors that motivate local privatisation have greatly grown in the last decade. As well, having available better and more comprehensive databases and using more refined empirical techniques have made possible to enhance our understanding of the dynamics of local privatisation, particularly in many European countries. The influence of fiscal stress, cost considerations – scale economies as well as transaction costs – and political partisan interests is usually confirmed. Furthermore, ideological attitudes appear to be more influential than they seemed to be, particularly when considering social services, rather than the technical ones.
Two leading economists argue that publicly owned commercial assets need to be taken out of the control of politicians. This radical, reforming book could lead to the creation of entirely new departments in the world's major banks, improve the fabric of democratic institutions across the globe, and increase global living standards.
The implications of uncertainty for public investment decisions remain controversial. The essence of the controversy is as follows. It is widely accepted that individuals are not indifferent to uncertainty and will not, in general, value assets with uncertain returns at their expected values. Depending upon an individual’s initial asset holdings and utility function, he will value an asset at more or less than its expected value. Therefore, in private capital markets, investors do not choose investments to maximize the present value of expected returns, but to maximize the present value of returns properly adjusted for risk. The issue is whether it is appropriate to discount public investments in the same way as private investments.
'Quite an accomplishment, this Handbook provides by far the most comprehensive overview of the role of the private sector and competition in infrastructure industries, with thoughtful surveys of each of the major infrastructure sectors and of the key regions and countries.' © Matthias Finger and Rolf W. Künneke 2011. All rights reserved.
This article expands the literature on the rationales and governance of state owned enterprises (SOEs). We show that SOEs could be seen as instruments of innovation policies and change agents within broader innovation systems that can overcome many of the conventional challenges of innovation policy and its implementation, from coordination and implementation of policies and innovation system actor networks to financing innovation. We review the existing literature on the rationales of SOEs and extend it to include innovation as a central rationale. Thereafter we provide a taxonomy that reveals the necessary policy and managerial conditions and constraints for using SOEs as instruments of innovation policy. We place some of the better-known innovation-oriented SOE successes and failures into this taxonomy and show that this approach will allow in future research to explore different SOE practices and potential for using SOEs as innovation policy instruments across countries.
Governments typically build and maintain public infrastructure, which they fund through taxes. But in the past twenty-five years, many developing and advanced economies have introduced public-private partnerships (PPPs), which bundle finance, construction, and operation into a long-term contract with a private firm. In this book, the authors provide a summary of what, they believe, are the main lessons learned from the interplay of experience and the academic literature on PPPs, addressing such key issues as, when governments should choose a PPP instead of a conventional provision, how PPPs should be implemented, and the appropriate governance structures for PPPs. The authors argue that the fiscal impact of PPPs is similar to that of conventional provisions and that they do not liberate public funds. The case for PPPs rests on efficiency gains and service improvements, which often prove elusive. Indeed, pervasive renegotiations, faulty fiscal accounting, and poor governance threaten the PPP model. © Eduardo Engel, Ronald D. Fischer, and Alexander Galetovic 2014.
Promising increased efficiency and superior service, the quasi-government has grown as governmental functions have been delegated to new entities combining characteristics of public- and private-sector organizations. Jonathan Koppell argues that control of public policy is sacrificed when public policy is carried out by such hybrid organizations. Although they may be designed to limit the loss of public control, Koppell suggests that quasi-government should be limited to tasks that are not of critical importance to policy-makers. © Jonathan G S Koppell 2003 and Cambridge University Press, 2009.
In recent years, concerns over the effectiveness of public administration have encouraged the widespread measurement and management of 'performance'. But is performance management an appropriate model for public sector organizations, and has it proved successful? Moreover, how do the principles of performance management affect how public bodies operate, and the way they relate to the wider community?. In this important text, the viability of performance management in public sector organizations is systematically assessed across a number of international case studies. The book provides a framework through which models of performance management can be understood in terms of both their impact within a public sector organization, and the effects that have been seen in countries with contrasting administrational contexts. Managing Performance - International Comparisons critically examines the effects of performance management models in the public sector, and assesses their future evolution. It is an important book for all students and researchers with an interest in management, public administration and public policy.
RESUME
Dans une économie de rente, les réformes économiques restent purement formelles et sont incapables de permettre à l'investissement national et international de se déployer. Elles ne permettent pas aux pays concernés de sortir de l'ordre social basé sur le gisement de la rente et la faible ouverture du système politico‐économique à la compétition. Sans perspective de croissance économique durable et de création d'emplois autres que ceux subventionnés par l'Etat, ce système fermé à la compétition porte en lui les germes de son dépassement : il ne peut répondre durablement à la demande sociale de changement et ne peut faire face aux difficultés croissantes de financement de la stabilité sociale .
Dans ce contexte, notre contribution se propose d'étudier les entreprises publiques évoluant dans une économie de rente et d'identifier les mécanismes permettant d'allouer les ressources de la rente au mieux de l'intérêt général. L'analyse amène dès lors à préciser comment repenser l'intérêt général national dans une économie de rente pour une meilleure prise en compte des besoins de développement durable. Comment reformuler les missions assignées aux entreprises publiques pour leur permettre d'internaliser au mieux cet intérêt général ? Quels nouveaux modes de gouvernance mettre en œuvre pour contribuer à la réalisation de ces objectifs ?
Mots clés : entreprises publiques, économie de rente, réformes économiques, gouvernances publiques, allocation de ressources, intérêt général .
We add potential intrinsic motivation to an agency model that is applied on public ownership and privatisation. Conventional agency theory suggests private ownership to be superior if pay under public ownership is not performance-related, but the ranking is otherwise reversed. However, we predict that motivation crowding out (MCO) can cause performance differences to go either way in both cases. Fat-cat salaries occur if public ownership with intrinsic motivation and a fixed wage is followed by privatisation with MCO, performance-related pay and a lower effort. The analysis also identifies factors that affect the performance of a given type of organisation.
In the West are the 'haves', while much of the rest of the world are the 'have-nots'. The extent of inequality today is unprecedented. Drawing on an extraordinary range of contemporary and historical examples, Why Nations Fail looks at the root of the problems facing some nations. Economists and scientists have offered useful insights into the reasons for certain aspects of poverty, such as Jeffrey Sachs (it's geography and the weather), and Jared Diamond (it's technology and species). But most theories ignore the incentives and institutions that populations need to invest and prosper: they need to know that if they work hard, they can make money and actually keep it - and the key to ensuring these incentives is sound institutions. Incentives and institutions are what separate the have and have-nots. Based on fifteen years of research, and stepping boldly into the territory of Ian Morris's Why the West Rules - For Now, Daron Acemoglu and James Robinson blend economics, politics, history and current affairs to provide a new, persuasive way of understanding wealth and poverty. And, perhaps most importantly, they provide a pragmatic basis for the hope that those mired in poverty can be placed on the path to prosperity.
In 1994 the regulatory framework of water services in Italy was radically modified, by transforming a traditional publicly operated system, which relied heavily for investments on fiscal budgets, into a system made up of self-sustaining corporate enterprises regulated at arm's length. After 19 years, the time has come to make an assessment of what has been achieved. This paper develops an original methodology, inspired by the concept of water sustainability, which tries to integrate economic, environmental and financial aspects within a unique framework. Our analysis discloses both allocative as well as distributive impacts of the reform, showing that it has been possible to generate some value for money while shifting the economic burden from taxpayers to service customers. However, improvements have been too slight and many signs are showing that it will be rather problematic to speed them up without undertaking a substantial restyling.
The use of private funding and management is enjoying an increasing trend in airports. The literature has not paid enough attention to the mixed management models in this industry, although many European airports take the form of mixed public-private companies, where ownership is shared between public and private sectors. We examine the determinants of the degree of private participation in the European airport sector. Drawing on a sample of the 100 largest European airports, we estimate a multivariate equation in order to determine the role of airport characteristics, fiscal variables, and political factors on the extent of private involvement. Our results confirm the alignment between public and private interests in partially privatized airports. Fiscal constraints and market attractiveness promote private participation. Integrated governance models and the share of network carriers prevent the presence of private ownership, while the degree of private participation appears to be pragmatic rather than ideological.
This symposium presents research from different contexts to improve our collective understanding of a variety of aspects of mixed forms of service delivery, be they mixed contracting at the level of the market (which is more common in the U.S.), or mixed management and ownership at the level of the firm (which is more common in Europe). The articles included in this special symposium examine the factors that give rise to mixed forms of service delivery (e.g., economic and fiscal stress, regulatory flexibility, geography, management) and how these factors impact their design and operation. Articles also explore the performance of mixed forms of service delivery relative to more conventional arrangements like contracted or direct service delivery. The articles contribute to a better theoretical and conceptual understanding of mixed/hybrid forms of services delivery.
Since the liberalisation of markets during the 1990s, the pressure on public sector entities to demonstrate their performance in financial and non-financial terms has increased. Compared to the private sector, accountability expectations and obligations are higher for public enterprises due to public ownership and objectives associated with the public mission. While there is a vast body of literature on public accountability in general, a research gap exists when it comes to linking the general debate of public accountability to sustainability reporting practices of public enterprises. Thus, the paper addresses the research questions about the performance of reporting practices of public enterprises with respect to public accountability and about the state of the art of sustainability reporting of public enterprises in Germany and Austria with respect to accountability. Therefore, this paper combines two research domains, social and environmental accounting research and the accountability of public enterprises. The paper reports the results of a survey, analysing the reporting practices of German and Austrian local public entities in particular. Annual reports and, if available, sustainability reports from 103 Austrian and German cities were examined.
Changes between state and market production of public services can be analysed as ‘pendulum’ swings, reflecting political struggles. The extensive re-municipalisations in the water sector and France and the energy sector in Germany provide evidence on this question. This is not the result of a coordinated institutional initiative, but a reflection of common political and economic factors. The most important of these are the greater efficiency of public sector provision, and the greater degree of control over the effective achievement of public policy objectives. These are closely related to the historic factors driving public ownership in the nineteenth and twentieth centuries. A distinctive feature of this twenty-first century tendency is the prominent role of green parties and environmental policies. The public sector paradigm has historically shown a remarkable resilience, underpinning the development of European public services for almost a century, compared with the three decades of domination by the market paradigm and its currently vacillating foundations.
This editorial introduction of the Special Issue of the International Review of Applied Economics on ‘Public enterprises and quality of institutions: alternatives to privatisation’ suggests some topics for a research agenda, and discusses how the papers included in the Special Issue contribute to the literature. The topics discussed in the Special Issue include new models of public ownership in energy industries, new trends of re-municipalisation of local public services (energy and water), regulation and public ownership, particularly in water supply, empirical evidence on productivity of public firms in electricity generation when the quality of government is good, internationalisation of government owned corporations in the telecommunication industry, the social benefits of public monopoly versus unbundling in network industries, and the role of intrinsic public service motivation of employees in governmental organisations at large. Some of these research issues are still in their infancy and potentially are important ingredients of a wider debate aiming at reviving public enterprise economics.