TOWARDS A PUBLIC SECTOR
ECONOMICS COMPONENT
Written by art boquiren 27 November 1999[1]
Although the UPCB-CSC-GPP has made tremendous advances in local governance and public policy research, it appears that a missing component is public economics research. Some of the topics that can be addressed in public economics research are as follows:
q what specific types of social goods[2] are most urgent at the local level?
q how can the social goods be provided by funds other than government funds?
q are there ways through which the private sector can be mobilized to provide the social goods through temporary build-operate-and-transfer schemes or limited and time-bounded monopoly license or franchise?
The research problems deal with practical problems[3] but the Economics Discipline can take this as an opportunity to advance theorizing in public sector economics---including theorizing on the provision of social goods at the local level. Models can be built or adopted to guide policy analyses.
In addition to social goods, there are goods with high positive externalities[4] and natural monopolies[5] in which government can take the lead in facilitating their provision. Theorizing on these matters must be advanced and articulated so theory can guide practice at the local levels for optimal results.
Further, there is also the issue of whether local governments can use municipal or other types of local bonds for fund raising purposes to support its projects. And if so, there is the question of under what conditions can the issue of these bonds are appropriate and wise. Theorizing on these or the articulation of long-established principles on these must be articulated to guide local government practice. The Discipline of Economics must be one of those at the forefront of this important task. The Discipline of Economics should also help local governments design local bond provision to ensure that local government obligations can be met and that the issues of local bonds yield benefits that are much way above their costs.
[1] During this time, UP Baguio was then the UP College Baguio and there was no Department of Economics and Political Sciences but instead there was the Discipline of Economics under the Social Sciences Division of the UP College Baguio.
[2] There are goods
known as social goods in which marginal social valuation is not
adequately reflected by markets because of non-rival and non-excludable
consumption. Resource allocation by markets for such public goods are
inefficient because the market is not able to reveal the real marginal social
benefits and costs of the goods. Demanding payments for social goods from
actual consumers, for instance, is difficult if not impossible. Some of the
public goods do not emerge in the first place. It takes an appreciation of
theory to distinguish which types of goods are social and which are private.
One can rely on the market for the private goods but government should take the
lead in mobilizing its resources as well creating schemes that would tap and
mobilize other sectors in the provision of social goods. .
[3] There is a term for this which I would find
out ASAP.
[4]
Externalities are benefits and costs not
captured by the market. These are also called third-party effects or benefits
and costs not received or borne by producers and consumers.
[5] Vesseth (1984: 64) says that natural monopolies are market failures on the supply side of the market: they are, paradoxically, markets where active competition among sellers leads to greater inefficiency than no competition at all.