Working Paper: NBER ID: w26766
Authors: Eduardo Engel; Ronald D. Fischer; Alexander Galetovic
Abstract: Public-private partnerships (PPPs) have emerged as a new organizational form to provide public infrastructure over the last 30 years. Governments find them attractive because PPPs can be used to avoid fiscal check-and-balances and increase spending. At the same time, PPPs can lead to important efficiency gains, especially for transportation infrastructure. These gains include better maintenance, reduced bureaucratic costs, and filtering white elephants. For these gains to materialize, it is necessary to deal with the governance of PPPs, which is more demanding than for the public provision of infrastructure. The governance can be improved by the use of contracts with appropriate risk allocation and by avoiding opportunistic renegotiations, which have been pervasive. The good news is that, based on the experience with PPPs over the last three decades, we have learnt how to address these challenges.
Keywords: Public-Private Partnerships; Infrastructure; Governance; Efficiency; Transport
JEL Codes: H11; H42; H83
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| PPPs (F31) | efficiency gains in transportation infrastructure (R42) |
| PPPs (F31) | quality of infrastructure maintenance (H54) |
| PPPs (F31) | reduction in bureaucratic costs (D73) |
| governance structures (G38) | efficiency gains from PPPs (H44) |
| governance structures (G38) | efficiency outcomes (D61) |
| poor governance (D73) | increased costs (J32) |
| effective governance (G38) | efficiency gains from PPPs (H44) |