Abstract: Public-Private Partnerships (PPPs) are becoming the key mechanism for the design, production, and operation of capital goods in the UK public sector and elsewhere. This chapter focuses on the central motivations behind the movement towards PPPs, and explores the impact of these new contractual arrangements on innovation in the capital goods sector. The greatest impact of the new arrangements appears to be the emergence of a PPP industry and a new division of labour among private providers and public procurers of capital goods. In addition to its traditional role as designer and builder of systems, the private sector has taken on greater downstream responsibility for the operation and maintenance of systems previously handled in-house by public sector organizations.

Keywords: public-private partnerships, capital goods, innovation, division of labour, design, production,