Why millions of the world´s poor still choose to go private (from The Financial Times)
Even though public school teachers and public doctors tend to be much more qualified (and cheaper to access) than their private sector counterparts, people in the developing world tend to choose the private option.
Why? Private practitioners only get paid if they do a good job, and so their incentives are in the right place, unlike government employees in most places who draw a fixed salary no matter what.
IPA Research Affiliates have done projects on how to improve incentives in public schools, such as linking salaries to monitored teacher attendance in India, but the article suggests that more are probably needed.