Government subsidies and the development of PPP projects: evidence from China

ABSTRACT

Based on micro data on public-private partnership (PPP) projects in China, this study adopts the survival analysis model and the difference-in-difference-in-differences (DDD) method to explore the effects of government subsidies on PPP project development. We investigate PPP project development from the perspective of contract signing and construction commencement, making an original contribution to the existing literature. We find that government subsidies can promote the faster signing of PPP contracts but cannot promote on-time construction commencement of PPP projects. This is because government subsidies do not solve the financing constraints that restrict the commencement of PPP project construction. Additionally, government subsidies can promote the faster signing of PPP contracts and on-time construction commencement of PPP projects in areas with high PPP market transparency.

KEYWORDS:

• Public-private partnerships
• government subsidies
• survival analysis
• China

JEL CLASSIFICATION:

• H43
• H71
• H39

Disclosure statement

No potential conflict of interest was reported by the author(s).

Data of availability

The data that support the findings of this study are available from the corresponding author, upon request.

Notes

¹ If the actual construction commencement year is less than the planned construction commencement year, it means ahead of construction commencement; if the actual construction commencement year is equal to the planned construction commencement year, it means timely construction commencement; if the actual construction commencement year is larger than the planned construction commencement year, it means postponement of construction commencement.

² If the PPP projects commenced construction within one month after signing the contracts, the value is 0; if the PPP projects commenced construction within one to six months after signing the contracts, the value is 1; if the PPP projects commenced construction within six to 12 months after signing the contracts, the value is 2; if the PPP projects commenced construction within 12 to 18 months after signing the contracts, the value is 3; if the PPP projects commenced construction within 18 to 24 months after signing the contracts, the value is 4; if the PPP projects commenced construction more than 24 months after signing the contracts, the value is 5. Eventually, an ordered categorical variable is obtained.

Additional information

Funding

This research was supported by the National Social Science Fund of China (No. 21AZD036); The Fundamental Research Funds for the Central Universities in China (JS2022ZSPY0034, JZ2022HGQA0182)