Outsourcing and public expenditure: an aggregate perspective with regional data

Abstract

Outsourcing can be defi ned as the delivery of public services by the private sector. The sign of the effect of outsourcing on public spending is ambiguous ex-ante. While outsourcing may reduce public spending through higher competition in the private sector, it may also increase public spending due to the presence of transaction costs or the so-called "hold-up" problem among others. Using a panel of Spanish regions over the 2002-2018 period, this paper explores the association between outsourcing and public spending empirically. Spain offers an interesting case study from a broad perspective, as the degree of decentralization of public health and education is almost complete, and the different regions have adopted quite distinct approaches as regards the public-private mix in the provision of these public services.In line with previous cross-country evidence [e.g. Alonso et al. (2017); Potrafke (2018)] our estimates point to a positive relationship between public spending and outsourcing. The result holds when a number of robustness exercises are carried out. By components, we fi nd that outsourcing is associated with higher public consumption and health spending, while there is no statistical association with investment and education expenditure. In any case, it is worth mentioning that the impact of outsourcing on the effi ciency of public spending cannot be ascertained with our approach, due to data limitations.

9. A propósito da regionalização em Portugal: o processo em Espanha

“…Deixando este parêntesis, a literatura refere como fixo o quadro institucional e territorial espanhol, lógica que se encontra nas análises sobre o efeito da terciarização dos gastos públicos na perspetiva regional (Delgado-Téllez et al, 2021), na evolução e determinantes da dívida pública regional espanhola (Delgado-Téllez e Pérez, 2020) e nos desequilíbrios fiscais regionais (Molina-Parra e Martínez-López, 2018). Mas outros fatores, como as interações entre níveis de governos, devem ser tidos em conta, o que nos permite entender o comportamento dos saldos orçamentais e outras variáveis económicas (Argimón e Hernández Cos, 2012).…”

Economic effects of recent experiences of federalism: Analysis of the regionalization process in Spain

“…15 Thus, consistent with these arguments, it is usual for the literature to consider the Spanish institutional and territorial framework as fixed, constructing the economic analysis (sometimes of very specific aspects) based on these premises. For example, following this logic it is possible to find analyses of the effect of outsourcing on public expenditure from a regional perspective (Delgado-Téllez et al, 2021), the evolution and determinants of Spanish regional public debt (Delgado-Téllez & Pérez, 2020) or the fiscal imbalances at the regional level (Molina-Parra & Martínez-López, 2018). Of course, other factors such as interactions between central and regional governments can be taken into account.…”