Nguyen, Tue Anh;
Hall, David;
(2018)
Economic Benefits of Public Services.
Real World Economics Review
, 2028
(84)
pp. 100-153.
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Abstract
The article reviews the extensive global empirical evidence on the relative efficiency of the private versus public sectors. The evidence does not support the view that there is any systematic difference in efficiency between public and private sector companies, either in services which are subject to outsourcing, such as waste management, or in sectors privatised by sale, such as telecoms. If the private sector does not have this efficiency advantage, then there is nothing to offset the higher private cost of capital, and it is always likely to be better value to use the public sector. At the macro level, far from being a burden on the economy, growth in public spending as a proportion of the economy has had a persistent positive link with GDP growth for more than a century, in developing countries as well as high income countries. The mechanisms linking public spending and economic growth include investment in, and maintenance of, infrastructure, supporting an educated and healthy workforce, redistributing income to increase the spending power of poorer consumers, providing insurance against risks, direct support for industry - including through technological innovation - and increasing efficiency by taking on these functions. This public sector activity, directly and indirectly, supports half the formal jobs in the world, and has a comparative advantage in delivering public goods such as universal access to healthcare, affordable housing, and protecting the planet from climate change. The need for public services and public spending is expected to grow globally due to continuing economic development, climate change and ageing populations, but, as in the past, this depends on the outcome of political processes.
| Type: | Article |
|---|---|
| Title: | Economic Benefits of Public Services |
| Open access status: | An open access version is available from UCL Discovery |
| Publisher version: | http://www.paecon.net/PAEReview/indexpart2.htm |
| Additional information: | This version is the version of record. For information on re-use, please refer to the publisher’s terms and conditions. |
| UCL classification: | UCL UCL > Provost and Vice Provost Offices > UCL BEAMS UCL > Provost and Vice Provost Offices > UCL BEAMS > Faculty of the Built Environment UCL > Provost and Vice Provost Offices > UCL BEAMS > Faculty of the Built Environment > Inst for Innovation and Public Purpose |
| URI: | https://discovery-pp.ucl.ac.uk/id/eprint/10131076 |
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