Effect of public–private partnership projects on inequality in developing countries

ABSTRACT

This study examines the effect of public–private partnerships (PPPs) on income inequality, focusing on economic infrastructures. For that, we use a sample composed of data from 38 low- and middle-income countries over the period 2000–2018. The empirical findings suggest that inequality has not been reduced; by contrast, income inequality has increased in countries that have developed PPP projects to a greater extent. This study offers practical implications about the social cost that the PPP formula has in developing countries.

KEYWORDS:

• Inequality
• PPP
• Public–Private Partnership
• developing countries
• income

Disclosure statement

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

Notes

1. For further information about gains, please, check Estache and Saussier (2014).

2. Further information: https://ppi.worldbank.org/en/ppi.

3. Further information is described in more detail on the website: https://ppi.worldbank.org/en/ppi.

4. Corruption is especially relevant in this case. It is highly correlated with many control variables, like inflation, economic growth, balance, openness, unemployment, and especially with the democratization index. In addition, according to Cuadrado-Ballesteros and Peña-Miguel (2022), corruption (which would be an explanatory variable in our model) would be highly correlated with PPP variables (which are currently explanatory variables). Then, our model would have several multicollinearity problems if corruption had been included.

Additional information

Funding

The work was supported by the Euskal Herriko Unibertsitatea [Consolidated Research Group EJ/GV: IT 897-16].