This interview was first published by the Stanford News Service.

The 2020 Summer Olympics have begun this week but public support among the Japanese public for the games has been generally low and their mood can be articulated through the succinct question: “Why are we doing this now?” says Stanford sociologist and Japan Program Director Kiyoteru Tsutsui.

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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.

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.

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.”

Technological progress boosts productivity and has made societies wealthier, but the impact of new digital technologies could be different from anything seen before. Some experts predict a future with robots and other forms of automation increasingly replacing workers, contributing to stagnant income, and worsening inequality. Yet it is difficult to pinpoint the net impact of advanced technologies on labor. There is anecdotal evidence that robotics and automation reduce manufacturing employment and wages, but evidence from the service sector remains scant. Collaborative research by APARC experts is now starting to fill this gap.

The researchers — including Karen Eggleston, APARC deputy director and director of the Asia Health Policy Program (AHPP), Yong Suk Lee, the deputy director of the Korea Program, and University of Tokyo health economist Toshiaki Iizuka, a former AHPP visiting scholar — set out to probe the impact of robots on services provided in nursing homes in Japan. Their study, one of the first investigations of service sector robots, offers an offset to the dystopian predictions of robot job replacement.

Published by the National Bureau of Economic Research, the study suggests that robot adoption has increased employment opportunities for non-regular care workers, helped mitigate the turnover problem that plagues nursing homes, and provided greater flexibility for workers. It is also published in AHPP's working paper series and is part of a broader research project by Eggleston, Lee, and Iizuka, that explores the impact of robots on nursing home care in Japan and the implications of robotic technologies adoption in aging societies.

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Japan has been on the front lines of a demographic crisis, grappling with a declining overall population, increasing proportion of seniors, and aversion to large-scale immigration. It has also been an early adopter of robots to address the shortage of care workers relative to a growing demand for long-term care services. Japan’s experience is especially instructive as more countries face aging populations, helping shed light on how demographics interact with new automation technologies.

In a VoxEU.org article, Eggleston, Lee, and Iizuka describe their study, its findings, and its implications. Examining the relationship between robot adoption and nursing home staffing in Japan, they find that robot-adopting nursing homes had between 3% and 8% more staff than their non-adopting counterparts. The increases in staffing occurred entirely among the non-regular employees. Nursing homes with robots also appeared to have higher management quality and were better able to reduce the burden on care workers. The results suggest “that the wave of technologies that inspires fear in many countries could help remedy the social and economic challenges posed by population aging in others.”

The Financial Times Magazine has recently featured the study by Eggleston, Lee, and Iizuka, calling it “groundbreaking in several ways but perhaps most clearly for setting its sights not on manufacturing but on the services sector, where robots are only just beginning to make their mark.” The great value of the study, the article notes, is that it lays the foundation for an empirical debate “on a subject that will be deluged with human emotion as robots continue their march into the services sector.”

You can also listen to a Financial Times podcast that features the new study (the segment starts at 4:52).