Public hospital corporatization and innovation in Lebanon and Chile : agency and decision rights approaches

Abstract

As the term "bureaucracy" has acquired increasingly negative connotations, one important set of problems concerning both scholars and policy makers interested in the public sector relates to incentives and institutions that are conducive to good performance. Recent developments in agency and contract theory shed some new light on old questions about public sector performance, of which I address three in this dissertation. The first question has to do with the manner in which institutional design in general, and decision rights allocations in particular, affect performance. The second has to do with the design of boards of governance in semi-autonomous, corporatized public agencies and how that affects incentives for performance. The third question has to do with incentives that drive innovation in the public sector, and encourage managers to create value in their work. I address the first two questions in empirical papers drawing on the recent experience in public hospital reform in Lebanon. In one paper, I develop a framework that analyzes decision rights evolutions in an innovative, quasi-legally corporatized public hospital. In another, I use the multi-tasking common agency model as an analytical lens to understand board member (principal) appointments and decision rights on corporatized hospital boards. I draw lessons from these two papers for the reform of the public hospital corporatization law in Lebanon. My final paper explains innovation in municipal finance in Chile, using the incomplete contracts approach. In each of the papers, I draw lessons for institutional design.