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Abstract. Three main types of privatization are found in the United States: (1) lower proportion of Gross National Product preempted by the public sector, leaving correspondingly more for the private sector, (2) transferring present government enterprises to private organizations; and (3) contracting out the production and delivery of services financed by public funds. Most discussions of “contracting out,” which come from the “public choice” school of economics and public administration, mainly emphasize theoretical economic advantages. They also suppose that the practice can eradicate political machinations. In contrast, this evaluation takes into account the practices’intensely political environment. Many of the advantages attributed to contracting out often are not realized. The practice in many cases can save money. But successes are likely to be achieved only with projects meeting certain narrow specifications.
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