State capacity and privatization: The paradox of child welfare reform

Privatization is a policy tool that has been used to address the limited capacity of government to meet its policy objectives. Whether motivated by ideological desires to reduce the size and involvement of government or touted as a pragmatic mechanism to strengthen government functions, privatization ultimately serves as a signal of the limited capacity of the state.;However, privatization has not been a simple answer to the problem of low state capacity. Specifically in the area of child welfare, states with privatized systems have not achieved better outcomes than public systems and many states continue to struggle with implementing privatization initiatives. This dissertation argues that this is due in part to a misunderstanding of the role of state capacity in privatization arrangements. Contrary to the literature that concludes low state capacity supports privatization; the investments required to implement privatization necessitate that government have the capacity to develop and manage these efforts.;To explore the relationship between state capacity and privatization, this dissertation analyzed the impact of institutional and fiscal capacity on levels of case management privatization in child welfare. The results indicate that state capacity is a dynamic, multidimensional concept that moderates the impact of child abuse rates and liberal government ideology. In addition, rather than supporting privatization, low state capacity reduces the probability that states will have privatized case management in their child welfare systems. These results have implications across a wide range of social policy areas because they suggest that privatization is an investment on the part of the state rather than a way to alleviate responsibility for negative outcomes.