The Effects Of Private Participation On Infrastructure

Privatization has grown exponentially over the years as the government continues to try to find more economic ways to conduct business. Through the use of contracts, this is achieved by utilizing the lowest bidder. Should the work being done not meet the standards set forth, the contract is not renewed and the process begins again saving the government money by not having to hire Civil Servants who are then employees of the government, whom do not have a contract and are very difficult to get rid of should their work not be satisfactory.

Why is contracting out so attractive to a public agency? Privatizing has its advantages that represent benefits to the agency.

In the past ten years there have been many infrastructure failures that make you wonder when the government will get serious about the issue at hand. Not paying attention to the condition of infrastructure has proven to

Procurement is the process of selecting suppliers and signing contracts for the purchase of goods and services. While simple in definition, quite the opposite is true when it comes to execution. When speaking about public and private sectors, they are two entirely different entities. They have different work principles, different functions and responsibilities in the economy, and different limitations to do work. In the case of government acquisition, the leading and primary objective is for public good, not profit. For a private venture, it is profit for the shareholders. A private company has to have profit as the first priority when awarding procurement contracts. Due to this obvious dichotomy, contractors generally either service

There would be many possible implications on the Chinese economy if they expanded their infrastructure investment. Expanding infrastructure investment may increase Chi-na's attractiveness as a destination for FDI. Other countries such as India have to com-pete for the same investment; China and India have similar comparative advantage’s i.e. low labour costs however an investment on infrastructure could put China at an advantage as firms would rather allocate in a destination with a better infrastructure. If firms decide

1.The International Labor Organisation states, “ African countries are increasingly appreciating the potential of linking infrastructure investments to employment creation and poverty reduction, thereby addressing both deficits in the fight against poverty.” (http://www.ilo.org/wcmsp5/groups/public/---ed_emp/---emp_policy/---invest/documents/meetingdocument/wcms_392965.pdf)

In order to understand the reasons behind privatisation of public services, it is essential to study the socio-political environment of the UK in the 1970’s. During this period of time, the UK was hit by the post-war crisis, which led the Tories British political party, also known as the Conservative Party, to lose dominance in the parliament. During this time, in the Ridley Report, the Thatcher shadow cabinet started suggesting about the need to break up the public sector and to disjoint unions. Initially, privatisation was subordinate to other policy themes. Nonetheless, during Margaret Thatcher’s governance starting in 1979, a certain degree of privatisation was put in place, notably regarding British Aerospace and Cable & Wireless (1). Nonetheless, during this period of time, the government’s aim was to privatise profitable entities, in order to increase revenues and therefore minimize borrowing from the public-sector.

There are two common areas of privatization, transportation and garbage collection. In Boston for example, the Metropolitan Boston Transit Authority undertook a huge effort to privatize public transportation. The result was a "private company and a coalition of unions each tentatively chosen to run their own network of MBTA buses, at costs considerably below what the authority now pays according to a Boston Globe article (Metro, Monday Feb. 3, 1997). How they arrived at this strange equation is unknown but the stated goal was to cut costs though competition. "Such arrangements reflect the belief that competition brings out the best among contenders-and that by inserting government units into a competitive environment, service recipients stand to gain much while risking little." (Ammons, D. and Hill D. pg. 12).

In the past, United States’ infrastructure were mainly developed and maintained by the private sector, this included major parts of transportation like railroads, roads, bridges, etc. This contributed to a significant proportion of the nation’s GDP (Wright & Murphy, 2009). Due to various financial crises, the United States government took over most of the nation’s infrastructure. This theoretically can be perceived as the right action as government ownership can help in keeping the firms afloat.

To build an infrastructure and promoting industrialization there are factors which are bound to be followed and they include; as much as there is advancement in the manufacturing and employment, there is need to invest and develop infrastructure of the third world countries who are still in the process of developing. This will ensure that the gross domestic product of the country (third world countries) will double by 2030.

Savas (2005) argued that privatization initiatives had reached their fruition, realizing that public interest viewed the public/private partnership were strong opposition among labor unions and believed that the proposed contracts threaten employment. Situations such as perceived abuse in political power became a common place for grass root organizations advocating progressive change to the free enterprise markets by organizing campaigns to block elected officials who supported public/private partnerships. However, some of the service contracts which dominated the privatization methods were sheer volume activity; that thirty-two of the sixty-six privatization contracts were not a mixed of the private-public partnership; out of the $1, 148 million

A privately financed project was a specified from of PPP that involved not only private sector financing but also controlling ownership. PFPs differed. From the outsourcing or construction by the government. There has been widespread adoption by Governments across the world of Public Private Partnerships (PPPs) as a way of providing public infrastructure. Grimsey and Lewis report that the UK version of PPPs,

In this paper, I will define privatization and explore different published articles that discuss contracting out to the

The need for financial stringency in public organizations due to budgetary pressures and tax resistance coupled with the need to Managing /balancing budget deficits and provide quality services with a reduction in revenue has always been a major challenge for public organizations. The need to save money and at the same time provide quality services, had forced government agencies to privatize and contract out. Recently, there is greater involvement of the private and nonprofit sector in public service delivery. More and more government functions in service delivery are now carried out by private and nonprofit organization. This is one part attributed to the belief that private organizations can provide services more efficiently and effectively than government operated services. And the other is the fact that it is cost effective and takes a lesser time frame. These two process are indeed unarguably beneficial to the government and private sector as well as the beneficiaries, but they can be also very daunting accompanied with huge challenges especially when not executed in the rightful manner. The case of the crummy contractor by Rainey depicts such a complex situation , where the process of contracting out was poorly conducted. The case highlights the demand for privatization and contracting-out and most importantly some of the challenges of privatization and contracting in government organization. it goes on further to identify some crucial pointed to be

For developing countries, their developmental objectives such as growth are very important. Natural monopolies like electricity or telecommunications are crucial to a nation's infrastructure.