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Warner, M.E. and A. Hefetz 2009. Trends in Public and Contracted Government Services: 2002-2007, Reason Foundation Policy Brief #80, Los Angeles, CA: Reason Foundation.

In this article we look at trends from 2002-2007 with special focus on differences in service delivery patterns by metro status. With the Reinventing Government reforms of the 1990s we saw a rise in for profit contracting among all governments from 1992 to 1997. In the 2007 survey we see a different story emerging. For profit contracting rates of suburbs increase slightly, but rural use of for profit contracting increases dramatically – almost back to the peak levels in 1997. Metro use of privatization, by contrast, falls. This article seeks to understand these trends. We believe that the rural resurgence reflects a diffusion of the innovation process where rural areas catch up with contracting – especially for relatively easy to contract services. The metro decline reflects a different kind of managerial learning where services that we earlier thought should be easy to contract have proven difficult to contract and monitor. In some cases these services have come back to public delivery and in other cases inter-governmental contracting has grown. Intergovernmental contracting enables local governments to share expertise and equipment, reach economies of scale in service delivery and promote regional coordination while maintaining familiar avenues for citizen input and accountability. Contract monitoring among local governments is low – and such low rates of external monitoring may lead governments to prefer contracting alternatives that keep the service in the public sector.

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Subject: Privatization