Public Sector Delivery — Public Sector: A Synthesis/Part 2

The current article synthesises three papers on public sector delivery, with special reference to developing countries. The papers employ a principal-agent framework, in the presence of asymmetric information, to identify appropriate policy interventions in order to deliver public services more effectively to the poor. Three main conclusions emerge. First, the lack of appropriate incentives results in limited impacts of public resources on services to the poor. Secondly, while decentralisation may lead to greater accountability and hence to increased prospects that services would reach targeted groups, the real possibility of the local elite capturing the services suggests that decentralisation is not a panacea; strengthening the institutional capability at the local level is essential if decentralisation is to be effective. Finally, bureaucratic behaviour involving potential collusion between the agent of the government and pharmaceutical companies would result in less health care being made available to the poor. In all cases, therefore, public interventions that reduce information asymmetry, including greater information propagation and disclosure, would seem to constitute steps in the right direction.