Page 358 - Invited Paper Session (IPS) - Volume 2

IPS277 Matthew Shearing
3.3 The Economics of PPPs in statistical capacity development
It seems that some NSOs, international organisations, and donors may
not have adequately considered the full economic costs and value-for-money
of their choices in respect of the models and partners selected for capacity
development. There has been a tendency to work directly with fellow public
sector professionals. This is potentially driven by convenience (avoiding
prohibitive bureaucracy), habit, a lack of trust in other sectors, legal concerns,
and mis-understandings about how the marketplace can optimise value-for-
money. It is necessary to be clear about how the market-place, or lack of one,
can affect the financial requirements and efficiency of expenditure on
developing statistical capacity.

Price mechanisms
The public sector is highly constrained in the efficiency in which it can
deliver services due to the pricing mechanisms involved in its work. Many
NSOs can be reluctant to release their staff from their daily activities to support
activity on the development of other NSOs, particularly their most
knowledgeable staff. Where they can, naturally they will charge high prices.
Existing NSO staff, while valuable to the beneficiary NSO, will therefore come
at a high price. Even where there is a private sector company leading a
partnership, there is limited room for negotiation and driving down the overall
cost. For public bodies such as NSOs and international statistical organisations,
there is no market incentive to decrease staff pricing which is often fixed by
internal regulation. This factor can inflate the costs of capacity development
projects delivered by the public sector and minimise the availability of
appropriate expertise.
A leading role for private sector technical service providers can minimise
these risks. This includes their ability to mobilise independent expertise at
market prices and find the best value among possible contributing NSOs.
However, it may also be beneficial to consider ways in which pressures on NSO
prices can be reduced and overall positive outcomes increased. We may
therefore consider how contributing NSOs can be attracted to a capacity-
building project not just as a source of income but because it will also lead to
strategic internal gains eg: through the development of its staff, improving
corporate knowledge including innovations which they can apply in their own
organisation.

Competition mechanisms
While allowing private sector providers to compete on price can lead to
significant reductions in costs, particularly in driving down the costs of human
resources, the market also provides incentives for them to compete to provide
the highest quality services, including in ensuring that outcomes are

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