Unpacking the Public Private Partnership Revival

Abstract

This paper examines the recent resurgence of interest in public-private partnerships (PPPs) to provide infrastructure in developing countries. First, the paper demonstrates that there has been a revival of support for private sector participation in infrastructure. Second, the paper argues that this revival differs from earlier attempts to increase the involvement of the private sector in public service provision in a number of respects. In particular, the current support for PPPs is related to an increased availability of global financial capital. Third, the paper considers the implications of this distinct feature of the revival for development.

Acknowledgement

The authors would like to thank Ben Fine and two anonymous referees for comments on an earlier draft of the paper.

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

1. Throughout this paper, we adopt a broad definition of infrastructure to include both what is, on the one hand, sometimes referred to as economic (or ‘hard’), such as roads, ports, airports, and so forth, and, on the other, social (or ‘soft’) infrastructure such as education and health provision. As a result, infrastructure and public services are used interchangeably, with ‘public’ capturing the reality that the state retains some degree of (or all) responsibility for the service provision, regardless of varying levels of private sector involvement.

2. See Romero (2015) for at least 25 different types of PPP (see also IOB, 2013).

3. A World Bank Report described the privatisation policy prescription as ‘oversold and misunderstood’ (Kessides, 2004, p. 86)

4. See http://www.worldbank.org/mdgs/post2015.html for an overview of specific instruments through which blending of (multilateral) development finance can proceed. See also Table 1 of United Nations (2014) and WEF (2015).

5. Much of the recent discourse on leveraging tends to conflate donor assistance and private finance into a single resource for financing development, ignoring the starkly differing long-term cost implications attached to each financing source. See for example the Development Assistance Committee (DAC)’s introduction of a new measure of Official Development Assistance (ODA) called Total Official Support for Sustainable Development to capture ‘finance made available thanks to the official sector’ (OECD, 2014b).

6. http://www.afdb.org/en/topics-and-sectors/initiatives-partnerships/africa50/about-us/

7. The PPP Knowledge Lab provides an overview of all existing country PPP units across the world, see https://pppknowledgelab.org/search?keys=PPP%20unit&restrict_pages=1&site_source%5B%5D=Handshake%20Journal&site_source%5B%5D=Knowledge%20Lab

8. See also quote from the AsDB above.

9. See also World Bank (2011, p. 5); WEF (2015); Schmidt-Traub and Sachs (2015); UNCTAD (2014).

10. See Bayliss and Van Waeyenberge (2015) for a detailed discussion.

11. In India, for instance, the India Infrastructure Finance Company Limited (IIFCL) was created as a non-banking finance company owned by the government with the aim of providing long-term debt to PPP projects. IIFCL raises funds from domestic and overseas markets under sovereign guarantees. These funds then provide long-term debt to PPP Special Purpose Vehicles. See https://blogs.worldbank.org/ppps/innovative-financing-case-india-infrastructure-finance-company.

12. See https://www2.unece.org/wiki/download/attachments/23758291/UNECE%20healthcare%20PPP%20standard%20-%20Public%20Review%20-%20v1.0.pdf