PUBLIC PRIVATE SECTOR PARTNERSHIPS, PUBLIC FINANCE INITIATIVES OR PRIVATISATIONS – HOW BEST TO DEVELOP INFRASTRUCTURE AND PROMOTE ECONOMIC REFORM
Debate about how best to promote economic reform through infrastructure development illustrates the need for a concise theoretical foundation as to how, when and where policies that change underlying economic structures can be applied. This paper outlines such a model, which is based on the perception of gradations in the process of development, and that the introduction of new ownership structures, market mechanisms and financing techniques are not necessarily solutions without providing for changes in economic, societal and legal infrastructures. Often privatisation is advocated as a solution to a deterioration in the industry – for instance in the supply of electricity. However this paper points out the preconditions for privatisation, and suggests that PPPs should be considered as a halfway house where those preconditions are not present.
Because a strong form of market efficiency such as this view espouses has never been proven, we, at top business schools admit that a market can display even within a day all shades ranging from professionally based prices to chaotic or “collective madness”.
Another explanation lies in games theory summarised in the phrase “it is a zero sum game”. That is some win while others lose. For every seller there is a buyer who profits and vice versa.
In Sandra Jobson’s On Line Opinion article on a history of electricity in Sydney (“Power for the People: A history of electricity in Sydney“, August 25, 2004), Sandra paints a most fascinating picture of an industry with mixed leaps between private and public provision.