What have we learned from the last three decades of empirical studies on factors driving local privatisation?

Abstract

REVISITED SERIES In the Revisited Series, Local Government Studies offers short updates of some of the journal's most cited articles of recent years. In these updates, the authors reflect on changes since their original contribution, while underlining the continuing relevance of the thinking behind the latter and indicating the direction in which this could be extended in the future.Here, Germà Bel and Xavier Fageda revisit an article they wrote for LGS Vol 33 No 4: 'Why do local governments privatize local services? A survey of empirical studies', in which they reviewed the then existing empirical literature on factors explaining privatization of local public services, focusing on four different types of factors: Fiscal constraints, cost efficiency, political partisan interests, and ideological attitudes. Here, they return to the issues raised in that paper, and review what we can learn from the empirical studies published after their article appeared in Local Government Studies.

Outsourcing within the Nordic context: Care services for older people in Finland

“…Moreover, and this point is especially relent with respect to service housing, they do not need to invest in building their own infrastructures. This study is not completely in line with other studies that have recognized the economic pressure on the municipality as a strong indicator of greater outsourcing (Bel & Fageda, 2017;Bhatti, Olsen, & Pedersen, 2009). Only the health and social expenditure variable showed a positive relationship with the outsourcing of home-help services.…”

“…The local government's decision to outsource is often argued to not be based purely on fiscal stress or any one factor but instead is grounded on a broader capacity of the institutional structure (i.e., the financial capacity, administrative ability and rationality of governance), rising care demands and the influence of neighboring municipalities (Bhatti, Olsen, & Pedersen, 2009;Stolt & Winblad, 2009;Yliaska, 2014). Some researchers have even claimed that outsourcing is the 'politics of good times' (Bhatti, Olsen, & Pedersen, 2009;Bel & Fageda, 2017).…”

“…he examined the outsourcing of services across local governments in the United States using four broad dimensions of municipal factors (financial pressure, market structure, power of public employees and public preferences of local governments). Several studies conducted after Boyne's (1998) work have used these dimensions and others (e.g., administrative professionals, political orientation and policy diffusion) to broaden knowledge of the outsourcing process in local governments (Bel & Fageda 2017;Bhatti, Olsen, & Pedersen, 2009;Green-Pedersen, 2002;Pallesen, 2004;Petersen, Houlberg & Christensen, 2015;Stolt & Winblad, 2009). However, few studies have focused on the outsourcing of care services for older people (Petersen, Houlberg & Christensen, 2015;Stolt & Winblad, 2009), and even in these studies, the care needs of older people are missing as a factor that should be considered as a reason to outsource.…”

“…In the literature, the economic condition of the municipality is considered an important explanatory factor. The main argument is that municipalities experiencing fiscal stress are more likely to outsource their services (Bel & Fageda, 2017;Zullo, 2009;Geys & Sørensen, 2016), because outsourcing help municipalities to save costs without increasing the municipal tax, reducing the service coverage or eliminating care provisions. The counterargument is that affluent municipalities are likely to 'experiment' with innovation by accommodating private providers, since they have adequate resources (in A c c e p t e d M a n u s c r i p t terms of finance and administration) to organize the complexity of outsourcing in an efficient manner (Bhatti, Olsen, & Pedersen, 2009;Pallesen, 2004).…”

Making a Market out of a Welfare State: Swedish Local Politicians’ Perspectives on Elderly Care Marketisation

“…35 Several driving forces to privatisation and marketisation are identified. For instance, Bel and Fageda (2017), after summarising 32 scholarly empirical studies, described four factors that significantly influence local privatisation: fiscal restrictions, economic efficiency, political interests, and ideological attitudes. The first two are about financial-and cost-related factors, whereas the others are more politically based.…”