Recently I have been traveling a lot, which has prompted me to think about the role of government in developing countries. One of the most noticeable things about all governments, but especially developing countries, is the amount of bureaucracy they impose on citizens in the form of licensing requirements and regulations. In many cases it is difficult to understand why such regulations exist and what societal benefit is derived.
If we think about the role of government, the basic requirements are:
- national defense, police administration and customs and immigration control
- administration of the money supply (and foreign exchange) and tax collection
- development of laws and a judicial system to interpret them
In my opinion everything else to be provided by a government can be an option and the government could:
- delegate the service to the private sector; or
- outsource the service to third parties
The difference between delegating and outsourcing is that in delegating the government let's market forces determine when a service is developed, whereas in outsourcing the government would take the initiative to have a service established. An example of delegation might be telephone service, which is now in the private sector almost everywhere in the world. An example of outsourcing might be adopting a portion of the tax code of another country (Venezuela adopted portions of the Mexican laws) or using a private company to confirm the contents of all imports (Indonesia). In order to address national priorities, such as health care or water supply management, outsourcing is probably a preferred alternative to letting market forces alone operate.
As crazy as my minimalist view of government may appear, the real problem is where do you find third parties willing to take on contracts to provide services in some of the most underdeveloped countries. This role could be filled by the NGOs and charitable foundations that do so much good around the world. If a willing government not bogged down in bureaucracy and regulations went to Catholic Relief Services or Medecins Sans Frontieres, for example, and offered them the opportunity to build and operate all the hospitals in a state or a small country I think the project would be well received. Where would the money come from? The government could contribute a portion and the charity/NGO would be required to raise the remainder. It might appear as a daunting task for a charity/NGO to raise the required money but the absence of government interference (and corruption) and the total administration of the project by the NGO/charity might make it more attractive to funding sources. Who knows, but properly structured, the hospital opportunity could be put out for bid. Of course, we would ask Harvard Medical School or a similarly qualified organization to administer the bidding process and choose the winner. They should be willing to do such a unique project for little cost.
If you think that outsourcing a major government project to an NGO/charity is just another example of my naive ramblings on government policy, a major foreign capital city is about to do just this. I expect to see this example copied as more governments look for new models to solve social problems, especially when a neighboring country receives worldwide publicity for their project(s). Improved worldwide communications increases peer pressure even amongst countries and this will foster innovation in government problem solving.
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