EFFICIENCY AND EFFECTIVENESS OF PARTNERSHIPS IN SOUTHERN EUROPEAN METROPOLITAN ADMINISTRATION

Javier Font
Head of the Revitalization Plan
Bilbao Metropoli-30
Gran Vía 45
48011 Bilbao
Spain
Tel: 34 4 415 86 85
Fax: 34 4 415 34 24
email: jfont@bm30.es


1. INTRODUCTION.
 
After their serious decline in the 1960s and 1970s, European metropolitan areas have experienced substantial growth in the 1980s and the 1990s. This growth is closely related to the rise of the "knowledge society", based on the production and the distribution of intangible assets. Metropolitan areas have managed to foster and attract knowledge, innovation, and culture in a greater measure than other areas. Moreover, their upgraded transportation and telecommunication infrastructure provides quick access to the global market.

While during the 1980s the shift southward in the European economic center of gravity benefited most Southern metropolitan areas (Parkinson et al., 1992:14), the 1990s have shown a similar pattern of urban development both in Northern and Southern European metropolitan areas. The rebirth of the urban economy coexists with increasing unemployment, crime, social exclusion, and environmental damage.

Since these problems are often closely interrelated, overlapping and mutually reinforcing, their solution requires a systemic approach (McQuaid, 1994:8).

While metropolitan areas seldom form administrative units, urban problems make a response at metropolitan level necessary. Individual municipalities, as well as regional, national, European authorities, and the private sector are pursuing their own policies within the metropolitan area (Van den Berg et al., 1993:3).

In order to face this reality, leading advocates of managerialism have therefore recommended the creation of partnerships among local governments, as well as with other layers of government and with the private sector, to improve performance in metropolitan government (Linden, 1995; Osborne and Gaebler, 1992).

From a theoretical perspective, public choice approaches view public organizations operating in a metropolitan area as multiple firms serving the same people with a different range of public goods and services (Bish and Ostrom, 1973). Competition rather than coordination among these multiple firms will create an efficient and responsive system of metropolitan government.

The principal-agent model offers another valuable theoretical framework to analyze the impact of partnerships on metropolitan government performance. Applying this model, metropolitan partnerships act as agents of local, regional and even central governments (principals) which delegate a certain degree of formal or informal decision making authority to them (Jensen and Meckling, 1976). The dependence of metropolitan partnerships on multiple principals, whose goals and interests often diverge, poses a serious challenge to their attempts to improve government performance.

A third theoretical approach to metropolitan partnerships is offered by the policy network model. According to this model, these partnerships are networks of public and private bodies interacting in the metropolitan area, which define, or at least influence, public policies (Jordana, 1995).

In spite of recent convergence in urban development patterns in OECD countries, Southern European metropolitan areas have specific social and political traditions which are less likely to foster partnerships than prevailing traditions in Northern Europe, and particularly, in the United States.

This chapter starts by analyzing obstacles to efficiency and effectiveness in Southern European metropolitan administration. After assessing the potential contribution of partnerships to eliminate those obstacles, it goes on to study the characteristics of two kinds of partnerships: those set up to deliver services, such as solid waste management or firefighting, and those focused on strategic planning and policy evaluation. Finally, the chapter suggests some recommendations to foster partnerships in Southern European metropolitan areas.
 

2. RECENT EVOLUTION OF SOUTHERN EUROPEAN METROPOLITAN ADMINISTRATION: OBSTACLES TO EFFICIENCY AND PERFORMANCE IMPROVEMENT.

During the 1990s Southern European metropolitan areas have been gaining increasing visibility on the international scene. Barcelona and Seville have hosted the Olympic Games and the World Exhibition, respectively, in 1992. Meanwhile, Lisbon has managed to attract two major events: the European City of Culture in 1994 and the next World Exhibition in 1998.

Other metropolitan areas, like Bilbao, Lyon, and Turin, have launched ambitious urban revitalization projects which include the Bilbao Guggenheim Museum, the refurbishment of the Lyon Opera House, and the redevelopment of the Lingotto FIAT factory in Turin as an exhibition and conference center.

In most cases, these international marketing and urban regeneration initiatives have not been matched by a clear strategy to improve performance in  metropolitan administration. This neglect of administrative reform may imperil urban revitalization, since an efficient administration greatly influences transaction costs and economic growth (Boix et al., 1993).

Specifically, in Southern European metropolitan administration efficiency and performance improvement has apparently been hampered by the five following factors:

1. The great number of layers of government and public bodies which operate in the metropolitan area.

As this number increases, it gets more difficult to coordinate them.

Applying the principal-agent theory to the relationships among layers of government, coordination problems result in transaction and information costs which are usually specified as agency costs (Neelen:72,1993). Briefly, agency costs are the sum of monitoring expenditures by the principal, bonding expenditures by the agent, and the residual loss caused by divergence between the agent's decisions and those decisiones which would maximize the principal's utility (Jensen and Meckling:308,1976).

In Southern Europe, the number of government layers increased during the 1980s as a result of decentralization and regionalization processes launched in France, Italy, and Spain.

Even in those areas which have recently developed some kind of metropolitan administration, such as Valencia, this new layer of government has not abolished any of the previous layers of government. For instance, six different administrative levels can be easily identified in Bologna and Valencia: European, national, regional, provincial, metropolitan and municipal government. Barcelona enjoys even a seventh layer of government, an intermediate one between metropolitan and municipal government: "comarcal" government.

Given that political leaders of administrations operating in metropolitan areas are likely to belong to different political parties, the political environment of metropolitan public administrators in Southern Europe tends to be especially turbulent. That turbulence is exacerbated by the relatively greater strength of Southern European political parties if compared to their Northern European or American counterparts.

A brief look at other metropolitan areas in the world shows that six or seven layers of government are the exception rather than the norm. For instance, and in spite of their larger population, American metropolitan areas, such as New York City or Los Angeles, have only four layers: national, state, county, and city government (Wright, 1988).

In fact, the greater number of governments operating in Southern European metropolitan areas is a result of historical traditions and recent trends towards European integration and decentralization. These factors make it difficult to abolish some tiers of government in order to increase coordination and achieve gains in effectiveness and efficiency.

Moreover, it has yet to be proved that a decrease in the number of layers of government will automatically improve public sector performance in the metropolitan area. Thus, public choice literature considers that competition among different layers of government, rather than coordination, will encourage efficiency (Jennings, 1986).

2. The perpetuation of separate jurisdictions across the metropolitan area.

The growth of most Southern European metropolitan areas has preserved the previous local jurisdictions. As a result, in metropolitan areas like Barcelona, Bilbao, Bologna or Lisbon the central city hardly encompasses half the population and the territory of the whole metropolitan area (Eurocities, 1995).

According to the theory of externalities, the atomization of the metropolitan area in small jurisdictions involves a loss of efficiency since both positive and negative externalities are not duly taken into account. In a nutshell, externalities are costs or benefits on third parties not participating in the market exchanges, which are not reflected in the market values of traded goods and services (Hyman:633,1989).

  For instance, small jurisdictions are likely to oppose projects, such as the extension of airport facilities or the construction of an incineration plant, that bother their residents, although benefit the metropolitan area in general. During the 1980s and 1990s the spread of NIMBY ("not in my backyard") and LULU ("locally undesirable land uses") attitudes and behaviors have fostered opposition to metropolitan schemes (Hoffmann-Martinot:500,1994).

Although consolidation of small jurisdictions usually allows for the internalization of those kinds of externalities, it also creates new political externalities. Whenever residents of small jurisdictions have different tastes and preferences, consolidation decreases their utility (Greene and Parliament, 1980).

Moreover, public choice theorists consider that increased efficiency derived from competition among different jurisdictions offsets the losses caused by externalities.

Another traditional criticism of fragmented metropolitan areas, emphasizes their inability to take full advantage of positive economies of scale. The result is that policy decisions, in key issues from air quality to public transportation, are made in a piecemeal fashion (Peirce:32,1993).

In order to avoid these undesirable effects, some American states, mainly western and southern, have given their central cities, such as Omaha and Albuquerque, strong annexation powers (Downs:19,1994). Although Bilbao and other Spanish cities enjoyed similar powers during General Franco's dictatorship, this seems unacceptable in the new democratic framework, which has consecrated local autonomy as a key constitutional principle.

In any case, when consolidation of jurisdictions goes beyond a certain size, positive economies of scale are surpassed by negative economies of scale, often in the form of congestion costs (Bouinot and Bermils:108,1995).

A final objection to a large number of small jurisdictions, states that it fosters fierce competition among them to attract residents and firms. For example, the municipalities of Metropolitan Bilbao have been competing against each other to build cultural and sports infrastructures, ignoring the achievement of positive economies of scale through joint collaboration (Villanueva, 1994).

On the contrary, public choice theorists, namely Charles M. Tiebout (1956), favor competition among municipalities as an efficient way to maximize citizens' individual satisfaction. As the number of municipalities increases, there is a wider range of choice available to citizens. In fact, fiscal migrations data suggest that citizens "vote with their feet" and move to the municipality which supplies a certain combination of public goods and services that maximizes their individual satisfaction.

3. The lack of an integral "vision of success" for the metropolitan area, truly shared by public and private agents.

Strategic planning is a key instrument to design and build consensus about that vision of success (Berry 1994; Wheeland, 1993; Bryson, 1988). Although some Southern European metropolitan areas, such as Barcelona, Bilbao, and Lisbon, have pioneered community wide strategic planning in Europe, with at least some emphasis on improving public sector productivity, they have only achieved mixed success (Associació Pla Estratègic Barcelona 2000, 1994; Bilbao Metropoli-30, 1992; Câmara Municipal de Lisboa, 1991).

As in other countries, most strategic planning efforts in Southern Europe have not been sufficiently related to the decision-making process and have not secured enough commitment from stakeholders to implement the plan (Golembiewski and Gabris, 1995). In some cases, the need to meet the stakeholders' different requests, has resulted in inconsistencies which have imperiled strategic planning initiatives (Halachmi, 1986). For instance, while some of the revitalization projects currently being undertaken in Bilbao or Turin will help them to achieve a European metropolis status, other projects will hamper this goal in favor of a provincial city status.

4. Insufficient commitment to policy evaluation and performance measurement.

Effective and efficient metropolitan government requires a reliable and outcome-oriented evaluation system (Crozier, 1987: 239). As a result of the mostly legal rather than managerial background of most Southern European local government administrators, outcome-oriented evaluation is often replaced by a wide range of merely formal and input-oriented controls (Ballart, 1992). Internal controls tend to be biased while external ones are not strong enough to get their conclusions implemented by administrators.

Besides, metropolitan governments face an increasingly changing and uncertain environment. In these conditions of uncertainty, the evaluation criteria should not only include the traditional 3 Es (economy, efficiency and effectiveness) but also the 3 Ds: ability to Diagnose the new problems, Design of new solutions and Development of those solutions (Zapico and Mayne, 1995, p.47).

5. The limited transfer of private sector management tools, such as total quality management (TQM) and reengineering, to metropolitan administration.

In the United States over 25 percent of all large cities have adopted TQM in at least one functional area (West, Berman, and Milakovich, 1994). Although some Southern European metropolitan areas, such as Barcelona or Bologna, have started to launch TQM programs (Roig and Chaves, 1995; Eurocities, 1995a), these experiences are rare exceptions.

Major factors for the scarce use of private sector techniques in Southern European metropolitan areas, are their late introduction in local business firms, the weak liaison between public and private organizations, and the lack of public management professionals. In contrast, private corporations, such as Motorola and 3M, have helped American Metropolitan areas, like Austin and Minneapolis, to apply TQM (ICMA, 1995).

From a theoretical perspective, the European Foundation for Quality Management (EFQM), set up in 1988 by 14 major European firms, has recently published the adaptation of its TQM model to Central and Local Government and established a specific quality award for public sector organizations (EFQM, 1995). These developments are likely to foster collaboration between private organizations and local authorities in the implementation of TQM in metropolitan government.

Regarding reengineering, there is scant evidence of its introduction in Southern European metropolitan administration in spite of its growing competitiveness problems (García Echevarría, 1995). The encouraging results achieved by reengineering in North American and British local authorities deserve, however, greater attention from Southern European metropolitan governments (Bovaird and Hughes, 1995; Halachmi, 1995).

In any case, the introduction of these private management models and tools in metropolitan government will only increase efficiency if there is a simultaneous change in the previous distribution of power among metropolitan political bodies (Prats, 1992, p.26).


3. METROPOLITAN PARTNERSHIPS IN SOUTHERN EUROPE.

Partnerships can be defined as actions or arrangements between organizations in the public or private sector for mutual benefit (McQuaid, 1994). The growth of partnerships is a major element of a wider trend: the increasing interorganizational nature of public administration (Etxebarria, 1988).

In Southern European metropolitan areas partnerships are a very useful tool to overcome the previously mentioned five obstacles to public sector efficiency and performance improvement.

First of all, partnerships can play a valuable coordinating role in the wide range of public institutions operating in the metropolitan area (Font, 1995).

For instance, the Spanish central government and the City of Barcelona set up a partnership called "Holding Olimpico, S.A." to coordinate the public works carried out in Metropolitan Barcelona to host the Olympic Games in 1992 (Sosa Wagner:182, 1995).

Similarly, in 1992 the central government, the Basque regional government, the County Council, and the City Council founded in 1992 Bilbao Ría 2000", a public-public partnership, made up of central, regional, provincial and municipal governments, to carry out urban regeneration projects on a cooperative basis in Metropolitan Bilbao. After the huge public investment in Barcelona and Seville for the 1992 events, self-financing of the project has become top priority for "Bilbao Ría 2000" (Rodríguez, 1995).

As a result of increased coordination of public institutions, the overall agency costs, in the different principal-agent relationships binding them, are likely to shrink.  If the partnership is a voluntary arrangement supported by strongly committed partners, that reduction will clearly exceed the new agency costs derived from the relationship between the partners (principals) and the partnership (agent).

However, in the case where partnership is imposed on public institutions of the metropolitan area, and only token commitment is secured, coordination benefits or reduction of agency costs in the previous multiple principal-agent relationships, will not be sufficient to make up for the increase in new agency costs. In this situation, the principle of subsidiarity should prevail.

Secondly, partnerships help to avoid undesirable consequences resulting from excessive fragmentation of the metropolitan area into separate administrative units. To this end, in 1966 the French government created "communautés urbaines", Bordeaux, Lille, Lyon, and Strasbourg. The municipalities of these metropolitan areas were required to transfer the "communautés urbaines" important powers in policy making areas like urban planning, public transport, water treatment, and elementary education (Subra, 1992). As far as these policies are concerned, the metropolitan area functions as a single administrative unit. Nevertheless, the great powers conferred by law on the "communautés urbaines" have risen municipalities' fears of losing a major part of their present functions (Jégouzo:9, 1993). As a result, since 1966 only five "communautés urbaines" have been voluntarily set up by municipalities.

Hence, the "communautés urbaines" illustrate a major merit of metropolitan partnerships: they internalize external benefits and costs, like the ones derived from solid waste management or water treatment projects. In any case, as metropolitan partnerships operate in a larger territory, political externalities begin to grow. The reluctancy of French municipalities, particularly small ones, towards metropolitan partnerships may not only originate from municipal politicians' self-interest but also from burdensome political externalities. The optimum size of metropolitan partnerships' jurisdiction should therefore take into account both efficiency gains from internalization of externalities and efficiency losses from imposing political externalities to communities with highly heterogeneous preferences.

Furthermore, partnerships allow local governments to take advantage of positive economies of scale and to undertake ambitious projects which are more likely to attract the interest and investment of regional government, national government, the European Commission, and the private sector. In Bilbao, a partnership made up of 30 municipalities in the metropolitan area managed to get funding from the European Commission and the Spanish central government to carry out a water treatment plan for the river. Cooperation among municipalities through this partnership was a key success factor in securing the financial support of both institutions. As long as congestion costs do not appear, metropolitan partnerships are therefore likely to increase efficiency.

Thirdly, partnerships joining the different layers of government and the public sector are extremely helpful in launching a strategic planning process, assuring adequate participation by key stakeholders in the design of a "vision of success" for the metropolitan area (Bryson and Alston, 1996).

However, Southern European local governments rarely have administrative units devoted to strategic planning and decision-making (Candel and Mendoza, 1988). As a result, in metropolitan areas most strategic planning efforts have been monopolized by the municipal government, with only token participation by other public institutions and the private sector. In fact, civil society organizations are not often invited or even refuse to take part in the strategic planning process (Granados-Cabezas, 1995).

A remarkable exception can be found in Bilbao where a public-private partnership was set up to carry out strategic planning in the metropolitan area. This partnership, called Bilbao Metropoli-30, was founded in 1991 by 19 public institutions and private firms. Today, it incorporates 51 private firms, 29 public bodies, and 24 non-profit organizations. For the last five years, Bilbao Metropoli-30 has led the design and implementation of the strategic plan to revitalize Metropolitan Bilbao, through collaboration between the public and the private sectors (Martínez Cearra, 1993).

Fourthly, partnerships are instrumental in carrying out independent and unbiased external policy evaluation in the metropolitan area (Subirats:160, 1994). A good example of this kind of external evaluation is the Annual Progress Report, produced by Bilbao Metropoli-30, which assesses the impact of public policies on the revitalization process of Metropolitan Bilbao (h.e.a.D., 1994). This report is based on data supplied by a purpose-built Revitalization Indicators System (Bilbao Metropoli-30, 1995).

In any case, partnerships active in policy evaluation should have a deep understanding of public institutions operating in the metropolitan area and engage their employees in the evaluation process. Otherwise, partnerships could incur in "the enlightened top-bottom disease", which ignores public employees in the evaluation process and therefore decreases their motivation (Bouckaert: 401, 1995).

Fifthly, partnerships, especially public-private ones, are likely to be successful in the transfer of private sector management tools to metropolitan administration. Thus, in 1995 the Associació Pla Estratègic Barcelona 2000 began the implementation of Total Quality Management in the City of Barcelona, within the framework of the Second Strategic Economic and Social Plan Barcelona 2000 (Roig and Chaves, 1995). Given the limited participation of individual private corporations in the Associació Pla Estratègic Barcelona 2000, the assistance to implement TQM has mainly been provided by university departments and external consultants.

On top of their positive contribution to eliminate these five obstacles, partnerships make available larger markets for the provision of services, fostering competition among an increasing number of administrative units and private suppliers. Nevertheless, the limited interest of Southern European governments in injecting competition into service delivery has not yet allowed them to take advantage of those larger markets (Osborne and Gaebler, 1992).


4. SERVICE DELIVERY ORIENTED PARTNERSHIPS.

Most Southern European metropolitan partnerships have been set up to achieve a higher degree of efficiency and effectiveness in service delivery, particularly in fields like solid waste management, water treatment, public transportation, urban planning and regeneration, social services, and economic development.

In Southern Europe, French metropolitan areas are the ones with the longest and strongest tradition in service delivery oriented partnerships. The best example of this kind of partnerships are the above mentioned "communautés urbaines".

The main one is the Communauté Urbaine de Lyon (Grand Lyon since 1991). In 1966 the central government statutorily forced municipalities in Metropolitan Lyon to transfer their following powers to the new Communauté Urbaine: urban planning, zoning, housing, public safety, public transportation, elementary education, water treatment, cemeteries, slaughterhouses, and the supervision of public roads (bra, 1992).

Regarding its organization, Grand Lyon is made up of 55 municipalities and administered by a council of 140 members who are also members of the municipal councils (Van den Berg et al., 1995). The composition of Grand Lyon's council therefore provides a direct link between the metropolitan administration and the municipalities. This link secures coordination between Grand Lyon and individual municipalities in the area and minimizes agency costs.

Given the European Commission's emphasis on partnership as a key element in the structural policy (CEC, 1987), municipalities in Lyon consider Grand Lyon to be the obvious agent to present metropolitan development projects to the European Union. As a result, Grand Lyon has recently submitted a proposal for the European Union's URBAN program. The proposal intends to regenerate 15 areas of the metropolis heavily affected by unemployment, environmental damage, and lack of adequate administrative services (Van den Berg et al., 1995).

From a theoretical perspective, the hierarchical authority  of "communautés urbaines" allows for the consideration of their relationship with municipalities in the framework of principal-agent theory. A proper assessment of these partnerships' efficiency should therefore measure both agency costs and coordination benefits (López Casasnovas, 1993, p.18). In Lyon, as a result of the strong link between the "communauté urbaine" and the municipalities, coordination benefits are likely to exceed agency costs.

Although the "communautés urbaines" have made great progress in coordinating municipalities in metropolitan areas, the high complexity of French administrative structure, and especially the multitude of municipalities (36,000), is still a hindrance to performance improvement in metropolitan administration. That is why the mayors of the main French cities, including Lyon, have recently demanded the creation of a new coordinating administrative structure: the "agglomération", which would join powers now dispersed among the "départements" (provinces) and the "communautés urbaines (Association des Maires de Grandes Villes de France:165; 1994).

In French metropolitan areas, service delivery oriented partnerships seldom involve the private sector. In fact, the strength of the public sector leaves little room to set up public-private partnerships as the ones which have proliferated in North America and Britain. However, there are some exceptions, such as "Euralille Métropole", a public-private partnership founded in 1988 to develop a TGV (high-speed train) station and a business center in Lille.

In any case, Euralille's legal status is closer to a semi-public organization's, rather than to the status of mostly privately-owned North American partnerships. The Communauté Urbaine de Lyon transferred its responsibility for urban planning in the project area to Euralille. In France, a public body can transfer its responsibilities to a semi-public organization provided the former holds more than half of the latter's capital (Van den Berg et al., 1993). In Euralille public authorities hold 50,33 % of the capital, the remainder being in the hands of private banks, the Chamber of Commerce, a subsidiary of the publicly-owned French railways, and business firms. Given the strong leadership of the Mayor of Lille, Pierre Mauroy, and the powerful role of the public sector in the project, agency costs are probably too small to substantially hamper Euralille's overall efficiency.

In Italy, Spain, and Portugal the uniformity of local administration across the country establishes the same administrative structure in urban and rural areas. Uniformity has resulted in weaker development of service delivery oriented partnerships in metropolitan areas. In these countries, metropolitan partnerships have often been set up to manage a specific service, such as public transportation or sewage. They therefore lack the global scope of the French"communautés urbaines."

In the last decade, there have been some attempts to set up global metropolitan partnerships in Italian, Spanish and Portuguese metropolitan areas. Unfortunately, they have only achieved mixed success.

In Italy, the 142/1990 law allows municipalities, for the first time, to create metropolitan partnerships, called "aree metropolitane", as independent and territorial local administrative structures in nine areas: Turin, Milan, Venice, Bologna, Florence, Rome, Bari, Naples, and Cagliari (RUR, 1992). This law does not establish a unique organization model for every metropolitan area. The design of the organization model is conferred on the regions, which are also the main players in the creation of "aree metropolitane" (Beltrán: 517, 1994). In any case, the process to create "aree metropolitane" is very complex and it also involves the national government, the province, and the municipalities.

The existing provinces in metropolitan areas may be replaced by the new metropolitan partnerships, as it is foreseen in the case of Bologna. On top of provincial powers, regions are authorized to transfer their powers in the following issues to "aree metropolitane": cultural heritage, urban planning, health, education, water and energy policy, traffic, and economic development. Also transferred to "aree metropolitane" will be those municipal powers that they can manage with a higher degree of economy and effectiveness.

Five years after the law was passed, there has been little progress in setting up global service delivery oriented partnerships. The length and complexity of the process to create these partnerships and reluctance from municipalities and regions have strongly contributed to the delay. In some metropolitan areas, such as Bologna, smaller municipalities demand subdivision of the City of Bologna into several separate municipalities, procrastinating the process even further (Alegre, 1994).

After long negotiations, the President of the Province of Bologna and the mayors of 50 municipalities agreed in 1994 to establish gradually a new metropolitan area. To coordinate this process, a "Conferenza Metropolitana" was set up, made up of the mayors of the participating municipalities, the presidents of both the Province and the Region, and representatives of the city boroughs (Van den Berg et al., 1996). One of the first tasks of this public-public partnership has been to foster integration of public services at metropolitan level. As a result, services formerly delivered by a great number of companies have been entrusted to a sole metropolitan firm and agency costs have substantially decreased.

As in France, Italian metropolitan areas have seldom set up public-private partnerships to deliver services or implement infrastructure projects. A major exception is the foundation of Lingotto srl., a public-private partnership to transform FIAT's Lingotto plant into a multifunctional exhibition and conference center. The lack of a tradition in public-private cooperation in Italian urban development and distrust of business leadership's intentions have raised certain criticism of the new public-private company (Somma, 1994).

In fact, Lingotto srl. acts as a strong policy network led by FIAT. The other participants in the network are state-owned firms and the municipality, which has played a minor role, mostly limited to the fulfillment of legal procedures (Van den Berg et al., 1996).

In Spain, global metropolitan partnerships existing in Barcelona, Bilbao, Madrid, and Valencia during General Franco's dictatorship were abolished by new democratically elected institutions. The strong dependence of these partnerships on the central government, their undemocratic heritage, and political rivalries between the regions and the municipalities were key factors in their abolition.

In 1985 the new democratic local legislation authorized regions to set up "áreas metropolitanas". These "áreas metropolitanas" may have two different functions: the coordination of municipal powers and the provision of supramunicipal services (Barrero, 1994).

Valencia has been the only metropolitan area which has set up a global service delivery oriented partnership in Spain. In 1986 the Region of Valencia set up a metropolitan partnership, called Consell Metropolita de L'Horta". In spite of its broad founding goals, its actual powers are limited to public transportation and urban planning (Barrero, 1994). This partnership is closely subordinated to the regional government. However, the region has been reluctant to transfer greater powers to the partnership.

While Madrid has been transformed into a metropolitan region, Barcelona and Bilbao have only set up partnerships to deliver specific services, like water treatment, solid waste management, and public transport. Strong regional governments in the Basque Country and Catalonia have opposed the creation of global service delivery oriented partnerships. The existence of a powerful provincial government in Bilbao has been another obstacle in the setting up of a global partnership in this area.

These phenomena are an expression of deeply rooted features of Spanish administrative culture, such as strong intergovernmental rivalry and competition for power and authority, as well as the weakness of tradicional mechanisms of the bureaucratic model based on hierarchy and specialization (Mendoza, 1991).

As a result, coordination benefits, agency costs, and political externalities are substantially higher in Spain than in France. While agency costs and political externalities directly damage powerful political bodies, recipients of the benefits achieved from increased coordination and positive economies of scale, are too dispersed. Hence, they are not able to generate a strong coalition to support metropolitan partnerships.

In spite of these obstacles, the increasing budget constraints and public demands are pushing reinvention in Spanish local government and forcing municipalities to focus their attention on efficiency and effectiveness (López Camps and Gadea, 1995). These changes are likely to revitalize partnerships operating in metropolitan areas.

In Portugal, the administrative structure remains heavily centralized. There is no regional tier of government in Portugal, except in Madeira and the Açores. As a result of centralism, which reduces the number of layers of government operating in the metropolitan area, and low jurisdictional fragmentation, Lisbon does not have any true global partnership involved in service delivery. There are only some associations of municipalities to manage solid waste and sewage (Van den Berg et al., 1995).

The organization of the 1998 World Exhibition in Lisbon has recently demanded the establishment of"Parque Expo 98", a public-public partnership led by the central government. The benefits from the coordination of central government and the two metropolitan municipalities taking part in "Parque Expo 98" are presumably limited. Similarly, agency costs are minimized by close links between this partnership and its members.


5. STRATEGIC AND ASSESSING PARTNERSHIPS.

The earliest examples of metropolitan partnerships focused on planning, rather than on implementing specific projects, could already be found in the United States in the post-war era. In 1943 the "Allegheny Conference on Community Development" (ACCD) was founded in Pittsburgh by Richard K. Mellon and other business leaders. Pittsburgh's mayor David L. Lawrence quickly joined ACCD's efforts and an effective bipartisan public-private partnership was launched, lasting for several decades (Ahlbrandt and Weaver, 1987). The ACCD inspired similar initiatives in other American metropolitan areas, such as the Greater Baltimore Committee" and "Cleveland Tomorrow". As a result, there is a great number of partnerships in North America devoted to strategic planning and public policy evaluation.

In Southern Europe, there are two major reasons for the relative scarcity of metropolitan partnerships of this kind. On the one hand, metropolitan areas have only recently started to apply strategic planning and policy evaluation. On the other hand, when they have been applied, the public sector has tended to monopolize the process, leaving no room for private sector participation. This case is illustrated by the recently established Metropolitan Area of Lisbon, an association of the municipalities without private sector involvement, which coordinates the projects presented by municipalities to the European Union's Community Support Framework.

In some other cases, such as Barcelona, Bilbao, Málaga, Saragossa, Lille, and Milan, the public sector, particularly the local government, has pursued private sector involvement with mixed success. In Barcelona and Málaga, the Associació Pla Estratègic Barcelona 2000 and the Fundación CIEDES, due to strong public leadership, have managed to involve employers associations and trade unions in the strategic planning process. However, they have failed to attract the interest of individual private corporations.

In the case of Bilbao, strong business leadership has fostered private sector participation, both in strategic planning and public policy evaluation, through Bilbao Metropoli-30. While there are several metropolitan partnerships devoted to delivering specific services or carrying out infrastructure projects, Bilbao Metropoli-30 lacks the implementation powers. Its main goal is to coordinate and promote public and private initiatives in the metropolitan area.

A third relevant Spanish example is Saragossa, where a strategic planning partnership named "Ebropolis" was founded in 1994 by city, county and regional governments, community groups, trade unions, and industrial associations. A major distinctive feature of Ebropolis from its Bilbao and Barcelona counterparts consists of its independence from a previous strategic plan. While Bilbao Metropoli-30 and Associació Pla Estratègic Barcelona 2000 were set up to foster the implementation of a previous strategic plan, Ebropolis designs the Saragossa Strategic Plan itself (Ebropolis, 1994).

In Lille, Euralille does not only confine its activities to a specific urban project but also functions as a catalyst within the metropolitan area for strategic thinking. To this end, Euralille has launched a number of discussion networks: groups of public and private sector representatives, that informally exchange information and mature certain suggestions in several issues related to metropolitan development (Van den Berg et al., 1993).

 Regarding Milan, the "Associazione degli Interessi Metropolitani", made up of 22 private corporations and supported by local universities, has been somewhat successful in involving the business sector in strategic and prospective thinking (Associazione degli Interessi Metropolitani, 1991).

These experiences also illustrate public sector reluctance to delegate formal authority to strategic and assessing partnerships, in spite of the higher or lower degree of private sector involvement. This reluctance may give some evidence of substantial agency costs existing in the principal-agent relationship between the public sector organizations (multiple principals) and the strategic and assessing partnership (agent). The combination of relatively expensive agency costs and the weak awareness of potential benefits of those partnerships for strategic planning, evaluation, and transfer of private sector management tools to the public sector, clearly limits their development.
 

6. RECOMMENDATIONS

The previous analysis illustrates the general impact of metropolitan partnerships on public administration efficiency and the contributions and challenges of some specific partnerships. The theoretical frameworks used in this analysis, namely principal-agent, policy networks, and public choice approaches, allow us to balance benefits and costs of these arrangements both for individual organizations and the whole community.

A major factor in the limited development of metropolitan partnerships in most Southern European countries stems from heavy agency costs, political externalities, and congestion costs. While those costs are clearly defined, most benefits, such as the ones arising from increased coordination, internalization of external effects, positive economies of scale, coherent strategic planning, independent policy evaluation, and transfer of private sector management tools, are not explicit enough and their individual recipients are difficult to identify.

Specifically, the following recommendations will help to make the strengths of metropolitan partnerships more explicit and to improve efficiency and effectiveness of Southern European metropolitan administration in general.

First of all, it is usually wise to separate service delivery oriented partnerships from those focused on strategic planning and public policy evaluation. While service delivery partnerships are given some degree of formal authority by the government, strategic and assessing partnerships only enjoy limited informal authority. Moreover, although close communication and interaction between both kinds of partnerships is required, the most successful experiences in planning and evaluation have been carried out by new organizations set up for this sole purpose.

Secondly, private sector participation in metropolitan partnerships often increase agency costs due to the scarce tradition of public-private collaboration and the weakness of civil society in Southern Europe. It is therefore necessary to reduce these agency costs through stronger links between the public and private sector. In any case, private sector involvement in partnerships is more easily achieved in the short run by strategic and assessing partnerships, with strong public or private leadership. Strategic and assessing public-private partnerships also contribute positively, in the long term, to private sector involvement in service delivery oriented partnerships.

Finally, successful international experiences regarding metropolitan partnerships should be adapted to take into account the particular cultural and historical local traditions of Southern Europe. Otherwise, large political externalities are likely to arise.
 


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