Thinking about PPPs

I am helping to draft a guidelines document for Public Private Partnerships, and I just wrote this: "Both developing and developed societies face the challenge of improving productivity in the provision of public services and of innovating in areas such as urban and broader mobility, energy, communications, health, education, or other social services. By the nature of these sectors, it is unthinkable that these challenges can be addressed either by the private sector alone or by the public sector alone.

The private sector and the public sector have specific advantages. Private operators have very specific objectives, which facilitates the introduction of explicit incentives. They can also have the ability to attract highly qualified personnel in fast moving industries. And they have the experience of operating in market contexts. In an increasingly globalized world, private operators can have access to inputs or experience from a diversity of regions or countries. The public sector has the ability to take into account broader objectives, the legitimacy of democratic mechanisms (in democratic societies) and it can also mobilize vast resources if necessary due to its potential legitimate use of coercion. At the same time, in some sectors where long run professional commitments are needed, the public sector has shown an ability to attract personnel endowed with intrinsic preferences (these are also a feature of not-for-profit organizations). Both the public and the private sectors are necessary to tackle societal objectives in a well-functioning modern economy, and both are necessary to develop modern smart and sustainable cities. As argued by Grout (2003), “reforms focus on the improvement of incentives; but while incentives are critical, the special characteristics of public services (and the people who provide them) must be recognized in the implementation of new structures and incentive schemes.”