All Shorenstein APARC News News March 10, 2021

New Book Reveals How China and the United States Engage the Private Sector to Deliver Public Goods

In their new book, APARC Deputy Director Karen Eggleston and co-authors John Donahue and Richard Zeckhauser of Harvard University seek to empower decision-makers to more wisely engage the private sector in the pursuit of public value by analyzing how China and the United States use collaborative governance strategies to meet growing demands for public services.
3D mockup of the book 'The Dragon, the Eagle, and the Private Sector'

China and the United States are usually cast as fierce rivals, but there are broad areas of society where the two nations share profound similarities. As they confront growing demands to provide their citizens with goods and services such as healthcare, education, housing, and transportation, both the Chinese and U.S. governments engage the private sector in the pursuit of public value, although they do so in different ways.

This type of engagement, in which the government calls on the private sector to meet public goals, is known as collaborative governance and it is becoming an increasing share of the economy in both China and the United States. A new book, The Dragon, the Eagle, and the Private Sector (Cambridge University Press), analyzes the application of collaborative governance in a wide range of policy arenas in China and the United States.

The book itself is the result of collaborative research by three co-authors: APARC Deputy Director Karen Eggleston, Harvard Kennedy School Raymond Vernon Senior Lecturer in Public Policy John Donahue, and Harvard Kennedy School’s Frank P. Ramsey Professor of Political Economy Richard Zeckhauser. On March 5, 2021, the three co-authors gathered for a virtual book launch, an event co-sponsored by Shorenstein APARC and the Mossavar-Rahmani Center for Business and Government at the Harvard Kennedy School.

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Introducing the new book, Lawrence H. Summers, president emeritus of Harvard University and the Charles W. Eliot University Professor at the Kennedy School, called the co-authors’ analysis of collaborative governance “micro microeconomics” that shows how particular tasks and particular commitments of resources, once decided on, are going to be best accomplished. This work, Summers noted, sheds light on situations involving both cooperation and competition — aspects that affect almost any complex problem yet are rarely considered by economists.

A key element of collaborative governance, noted Zeckhauser, is the sharing of discretion. Rather than contracting at one pole and complete laissez-faire at the opposite pole, in a collaborative governance process, the two parties involved play a role in determining what is produced and how it is produced. It is a process that calls on the best capabilities of both the private and public sectors and that grants each of them an element of control. Sometimes that process results in triumphs, sometimes in tragedies, and other times in outcomes that are “in-between.” The book analyses cases of this entire gamut. “We hope that this volume provides guidance on how the triumphs can become more common, the tragedies more scarce, and the in-between outcomes improved,” said Zeckhauser.

This book provides a key to understanding how to achieve [...] quality-public-private collaboration, done right. Delving deep into two very different societies, the US and China, the authors provide lessons that illuminate and should inform scholars and policymakers alike.
Fareed Zakaria
Journalist and Author

Collaborative Governance in the Time of COVID-19

The unfolding of the COVID-19 pandemic provides dramatic current illustrations of collaborative governance. The urgent need for an effective vaccine created the conditions for a successful partnership between the U.S. government and the pharmaceutical sector, with the former offering both regulatory processes and significant financing, the latter its innovation. Consider the Moderna vaccine, which, based on evidence from clinical trials, is over 90% effective at preventing laboratory-confirmed COVID-19 illness. The vaccine was created within less than a year using a new approach, based on Messenger RNA technology, by a company that had never before produced a commercial product. “This is a triumph of collaborative governance,” said Zeckhauser.

The vaccine distribution process in the United States, however, has proved to be challenging and chaotic. Zeckhauser contrasted this experience with China’s activation of technology giant Tencent, which is using its ubiquitous WeChat application to allow individuals to easily find where the vaccine is distributed and sign up for vaccination appointments. “There is probably a lesson here in the way these two outcomes came about. We hope that individuals in both China and the United States will examine the lessons in this volume to see how they can achieve outcomes for their citizens that produce public benefits more effectively.”

A Spectrum of Policy Domains

The book details how China and the United States grapple with the complexity of producing the goods and services they need to meet a broad array of public goals. Eggleston surveyed the five broad policy domains she and her co-authors examine in the book through detailed historical legacies and case studies of the application of collaborative governance in both countries.

These domains include the railroads that build the nation historically in both countries and China’s high-speed rail network; real estate's intricate tangle of public and private partnerships; hosting the Olympic Games and the experience of the public and private sectors in that endeavor in both countries; education provision; and state and market in population health and health care in both countries. The book spotlights the different ways in which both countries produce public goods and services in these broad policy domains.

It is crucial for China to embrace the transparency imperative because the evil twin of collaborative governance is cronyism or corruption.
John Donahue
Harvard University

East and West

Professor Yijia Jing of Fudan University, an expert on privatization, governance, and collaborative service delivery, participated in the discussion with the book co-authors and shared insights on public-private relationships in China. Collaborative governance in the country, he said, has undergone a gradual process of institutionalization. He observed that Chinese local governments apply different strategies in collaborating with private companies. For example, local governments like Guangdong and Shanghai partner in different ways with digital giants Tencent and Alibaba to build up their digital capacities — collaborations through which they have been learning how to balance their multiple roles as partners, policymakers, and market regulators.

Jing noted that China uses collaborative governance not only in domestic arenas but also in areas of international development, through entities such as the BRICS Development Bank and the Asian Infrastructure Investment Bank. China is also promoting collaborative governance as part of its Belt and Road initiative.

A Call for Transparency

The Dragon, the Eagle, and the Private Sector helps decision-makers apply the principles of collaborative governance to effectively serve the public. The book's overarching conclusion is that transparency is the key to the legitimate growth of collaborative governance. In the United States, said Donahue, the principle of governmental transparency is widely accepted as a broad-spectrum accountability device. He recognized that he and his co-authors do not expect China to adopt the U.S. approach to transparency, but expressed their hope to see more transparency “with Chinese characteristics.” “It is crucial for China to embrace the transparency imperative because the evil twin of collaborative governance is cronyism or corruption,” Donahue argued.

In many countries and policy arenas, collaborative governance could effectively increase innovation but is not available because the populace is convinced that any interaction between the public and private sectors amounts to corruption on the part of elites against the public interest. The potential in China to create public value through interaction between its public and private sectors is enormous, concluded Donahue. ”It would be a shame to squander that.”

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