Contracting out, as an economic policy instrument, began to gain attractiveness in both developed and developing countries following the apparent successful results in United Kingdom and United States. The rhythm of contracting out in Sub-Saharan Africa has increased in order to enhance service delivery. The purpose of this study is to give a critical review of the theoretical framework of contracting out. The specific objectives include: to examine major extant and/or evolving contracting out theoretical paradigms and their relevance to the public sector management; challenges encountered in contracting out and factors influencing successful contracting out. The review discusses gaps in the literature and the directions in which future studies may address these gaps.
The paper critically reviewed the contracting out theoretical framework specifically focusing on the strengths and weaknesses of each theory. The gaps in the literature were indentified and the directions future studies should address were outlined. The institutional and capacity issues have been identified. It also exposed the critical need for capacity within the government to develop and monitor contracts.
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