joint venture,

partnership or alliance among two or more businesses or organizations based on

shared expertise or resources to achieve a particular goal. The term joint venture is
often used for commercial activities undertaken by multiple firms, which abide by
contractually defined rules for sharing their assets and the consequent risks and
gains of their joint action. The public sector often plays the role of a partner in a joint
venture, developing agreements with outside firms or organizations to achieve goals.

However, joint ventures involving the public sector raise issues about the nature
of accountability and the scope of state responsibilities. In entering a partnership
with a private firm, the public sector’s role is defined as both an investor and a
partner. Rather than directly producing the good or service or acting through an
arm’s-length contract, the public sector is engaged in a more-extensive contractual
arrangement with a firm. As a result, the “publicness” of the venture is often opaque
—the good or service may be co-owned and managed by both the public and private
sectors. This situation can raise questions about the nature of political accountability
and the scope for public action in unforeseen circumstances. Joint ventures
substitute direct forms of accountability for the good for a more market-based form
of accountability operating through contracts; however, the longer-term or more-
extensive nature of the contracts means that the public sector is not simply playing
the role of a buyer of a good or service but that of a market player. Critics maintain,
though, that this dual role is difficult to sustain, because the government bears
political responsibility for its actions that extend beyond the contractual structure,
which means it may continue to bear risk with reduced mechanisms for political
control.

A joint venture is distinct from other forms of partnerships among organizations,

such as mergers or simple contractual arrangements. Partners in a joint venture
maintain a separate legal identity but are bound by agreements about how
to share the equity, liability, and profits of their partnership. When the public sector
is involved in a joint venture, it is often called a public-private partnership and
involves public-sector investment and expertise in conjunction with a private-sector
partner. Public-private partnerships may involve a range of activities from the
construction of infrastructure and scientific research to more-ongoing collaboration
in running an organization. Although these types of partnerships have long existed,
they became increasingly prevalent in the late 20th and early 21st centuries, and a
number of advanced industrial countries embarked on significant joint ventures with
the private sector to construct hospitals and mass transit systems and to invest in
new technologies. Joint ventures are also widespread in developing nations and
indeed are often explicitly promoted by foreign governments and nongovernmental
organizations in granting aid and earmarked funds to developing nations.
Joint ventures are often attractive to the public sector because they allow an infusion
of private money and expertise in pursuit of public aims.