Governance: An international journal of policy, administration and institutions

Why privatization? New services, not fiscal stress

A new study of privatization decisions by US country governments from 1992 to 2002 challenges the assumption that fiscal stress is a major reason for privatizing public services.  “There is no evidence that fiscal stress induces privatization,” says Roland Zullo in the current issue of Governance.  Nor is there clear evidence that politically conservative regions favor privatization, or that labor-friendly laws impede it.  Surprisingly, says Zullo, “the results suggest that private and intermunicipal contracting expand when government grows . . . this reflects a pragmatic use of external suppliers for trial, temporary and contingent services.”  Read more: Does Fiscal Stress Induce Privatization? 22.3 (July 2009).

Written by Governance

July 17, 2009 at 1:00 am

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