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Balancing Market and Government Failure in Service Delivery

Author

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  • Jeffrey S. Hammer

    () (Visiting Professor in Economic Development, Princeton University.)

Abstract

Whether to provide services by the public or the private sector has been at the center of debates within governments and those in the international aid industry for decades. Unfortunately, this debate has often been cast in terms of absolutes with the private sector either as savior or demon. Casting the issue in this light simply can’t be correct. It cannot be the case that either is appropriate for every service and with every government regardless of its capability to the exclusion of the other. In every case, policy makers need to ask “how can the government improve the well-being of citizens with the constraints and tools at hand?” Those constraints include the ability to implement and monitor policy. This paper outlines how limitations of the market can be matched to appropriate interventions by government as it actually performs, not as it is hoped to perform. This matching will, by necessity,vary with country circumstance. While pure public goods must be provided by government regardless of its weaknesses and pure private goods should generally be left to the market, most serious policies operate in between. The balance of the limitations of the sectors needs careful analysis. The welfare costs of private market failure are rarely measured and the difficulties of implementing different policies are rarely discussed let alone quantified. Policies that are sensitive to deviations from perfect implementation should be avoided in preference to those that are more robust to circumstances. Further, every policy will generate interest groups that will constrain future decisions through political pressure.

Suggested Citation

  • Jeffrey S. Hammer, 2013. "Balancing Market and Government Failure in Service Delivery," Lahore Journal of Economics, Department of Economics, The Lahore School of Economics, vol. 18(Special E), pages 1-19, September.
  • Handle: RePEc:lje:journl:v:18:y:2013:i:sp:p:1-19
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    File URL: http://121.52.153.179/JOURNAL/LJE%20vol%2018%20se/01%20Hammer.pdf
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    References listed on IDEAS

    as
    1. Nazmul Chaudhury & Jeffrey Hammer & Michael Kremer & Karthik Muralidharan & F. Halsey Rogers, 2006. "Missing in Action: Teacher and Health Worker Absence in Developing Countries," Journal of Economic Perspectives, American Economic Association, vol. 20(1), pages 91-116, Winter.
    2. Pritchett, Lant & Filmer, Deon, 1999. "What education production functions really show: a positive theory of education expenditures," Economics of Education Review, Elsevier, vol. 18(2), pages 223-239, April.
    3. Das, Jishnu & Hammer, Jeffrey, 2007. "Money for nothing: The dire straits of medical practice in Delhi, India," Journal of Development Economics, Elsevier, vol. 83(1), pages 1-36, May.
    4. Hammer, Jeffrey & Spears, Dean, 2013. "Village sanitation and children's human capital : evidence from a randomized experiment by the Maharashtra government," Policy Research Working Paper Series 6580, The World Bank.
    5. Spears, Dean, 2012. "Height and cognitive achievement among Indian children," Economics & Human Biology, Elsevier, vol. 10(2), pages 210-219.
    6. Andrabi, Tahir & Das, Jishnu & Khwaja, Asim Ijaz, 2006. "A dime a day : the possibilities and limits of private schooling in Pakistan," Policy Research Working Paper Series 4066, The World Bank.
    7. Nazmul Chaudhury & Jeffrey S. Hammer, 2004. "Ghost Doctors: Absenteeism in Rural Bangladeshi Health Facilities," World Bank Economic Review, World Bank Group, vol. 18(3), pages 423-441.
    8. Jishnu Das & Jeffrey Hammer & Kenneth Leonard, 2008. "The Quality of Medical Advice in Low-Income Countries," Journal of Economic Perspectives, American Economic Association, vol. 22(2), pages 93-114, Spring.
    9. Das, Jishnu & Hammer, Jeffrey, 2005. "Which doctor? Combining vignettes and item response to measure clinical competence," Journal of Development Economics, Elsevier, vol. 78(2), pages 348-383, December.
    10. Stern, Nicholas, 1989. "The Economics of Development: A Survey," Economic Journal, Royal Economic Society, vol. 99(397), pages 597-685, September.
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    Cited by:

    1. Niels-Hugo Blunch & Jeffrey S. Hammer, 2018. "The Last of the Lost Generations? Formal and Non-Formal Education in Ghana during Times of Economic Decline and Recovery," Journal of African Development, African Finance and Economic Association, vol. 20(2), pages 35-60.

    More about this item

    Keywords

    Social services delivery; governance; education; health delivery; Pakistan.;

    JEL classification:

    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • L88 - Industrial Organization - - Industry Studies: Services - - - Government Policy

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