CAN PRIVATISATION AND COMMERCIALISATION OF PUBLIC SERVICES HELP ACHIEVE THE MDGs? AN ASSESSMENT

Basic services are essential to reducing poverty and im proving quality of life. This working paper focuses on health, education, energy and water. These services contribute to achieving the M illennium D evelopm ent G oals, as well as being goals in them selves. O ver the past twenty years or so, the way in which these services are provided has been subject to considerable policy debate. There has been widespread questioning of the ability of the public sector to effectively deliver such services. Largely as a result, m arket-oriented solutions have been prom oted as a m eans to overcom e apparent constraints posed by state-provided services. N otwithstanding the weaknesses of state provision in m any countries and localities, this working paper argues that reliance on private sector provision will fail to address the central challenges of public sector delivery. Furtherm ore, the process of privatisation creates an incentive fram ework that underm ines, rather than strengthens, the accountability and capacity of the State to provide accessible and affordable services. In addition, the paper argues that the adoption of full cost recovery policies can seriously threaten achievem ent of the M D G s. This position does not constitute a blanket statem ent against private sector participation in public services or against user fees. Rather, it m aintains that m arket-led policies fail to contribute to the M D G s and often reduce the likelihood of achieving them . Strengthening the State in assum ing central responsibility for providing essential public services will help correct these setbacks. ∗ This paper was m ade possible by the support of the Poverty G roup of the U nited N ations D evelopm ent Program m e and the International Poverty Centre. The work on this paper and som e of the background research stem s from a global U N D P project on Privatisation and Poverty Reduction. W e extend special thanks to Terry M cKinley, Acting D irector of IPC, for his support of this work and his extensive com m ents on this paper. ∗∗ Independent Consultant, Sussex, U nited Kingdom . ∗∗∗ Senior Research Associate, Centro de Investigación para el D esarrollo, A .C. – M exico City, M exico. 2 International Poverty Centre W orking Paper no 22