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Article Summary

Greene, Jeffrey D. 1996. "How Much Privatization: A Research Note Examining the Use of Privatization by Cities in 1982 and 1992." Policy Studies Journal 24 (Winter): 632-640.

Greene's article relates to an inquiry done by the International City Management Association for 596 cities, between 1982 and 1992, that gauged how much municipalities had privatized and their reasons for privatization. The ICMA surveys recorded the incidence of privatization in 59 municipal services across five broad functional areas. The study used two indicators of privatization, privatization levels and privatization diversity. Privatization levels represent the breadth of privatization among services. Privatization diversity levels represent the amount of privatization a city uses within services. The findings suggest privatization increased significantly in this ten-year period, mainly as a remedy for fiscal pressures. It is believed that private firms have lower costs attributed to better efficiency.

Overall privatization is occurring in all regions of the country, but some regions faster than others. Between 1982 and 1992, Southern cities experienced the highest increase of proportional growth at 158%. Midwestern cities were second with 131% proportional growth. Western cities had the highest levels of privatization in 1992 (29.9% of ICMA - surveyed services) and experienced the third largest increase at 102% of proportional growth. Finally, Northern cities had the lowest increase at 64% proportional growth.

Between 1982 and 1992, average privatization diversity levels for all cities increased proportionally by 40% (from 13.9% to 19.4%). The South's proportional increase was highest (56%) of privatization within services. The Midwest was second with 52%. The West came in third with 26% of privatization within services. Finally, Northern cities were last with 6% of privatization within services.

The leading area where privatization occurs most was in support functions with an average increase of 508%. Public safety functions were second with an average increase of 355%. Public works had an average increase of 218% coming in third. Finally, Parks and Rec. was fourth with and average increase of 218%.

Privatization appears to be increasing dramatically in all sectors throughout the nation. It appears that private firms are able to do jobs better at lower costs, which is most likely due to competition forcing innovations among the various industries.