![Sample our Politics & International Relations journals, sign in here to start your FREE access for 14 days]({"type":"image" , "src" : "/sda/5947/TOC-Subject-Sample-2021-Politics-International-Relations.jpg"})
ABSTRACT
Public-Private Partnership (PPP) is the label often applied to long-term contractual arrangements when the private sector provides management and operating services for public infrastructure and puts private finance at risk. Political and economic logics have long been applied when analysing the success of such infrastructure delivery mechanisms. Mixed empirical performance results has been a recurring theme. Decades of PPP implementation experience has improved our knowledge of the political and policy “logic” of PPP success, but public administration scholars know less about the logic of the economist, about how economic thinking has evolved and its effects on PPP evaluation. This article explores discussions and debates analysing the economics of PPPs. It challenges the PPP economic efficiency argument, not from the perspective of public administration or public policy (which now repeat well-rehearsed arguments) but from the perspective of economics itself. The article argues overall that there are strongly competing economics logics relevant to PPPs, and that public administration scholars need to be more aware of these internal economics controversies and debates rather than assuming that economics is a settled homogenous discipline. Furthermore, it argues that this heterogeneity of economic logics is a central reason why PPP performance debates continue to be unresolved.
Disclosure statement
No potential conflict of interest was reported by the author(s).
Notes
1. This article expands the arguments made in chapter four of Hodge and Greve (Citation2019).
2. The definition of a public-private partnership has seen much debate. PPPs cover many families of public-private arrangements, of which one prominent global family is that of long term infrastructure contracts. All PPP families invoke the ideal of collaboration, but local PPP conceptions can vary dramatically. Despite this ambiguity, the PPP language is global.
3. Alternative rationales supporting PPP superiority (eg. Estache & Saussier, Citation2014) are acknowledged.
4. See G. Hodge (Citation2010), who listed 21 assumptions made by Western liberal governments in using PPPs.
5. A parallel observation exists in competition policy. Biggar and Heimler (Citation2020) note that competition is a means to an end, with economists debating the end goal for a century. These debates continue today, with five possible end goal rationales; maximising total economic welfare; promoting consumer welfare; preventing firms from acquiring market power; protecting the competitive process; and protecting sunk investments.
6. The opposing belief of one anonymous reviewer is acknowledged. They stated “I believe these points … certainly do arise when governments are discussing the option of using this mechanism for dealing with demands for public infrastructure.”
7. On the other hand, if businesses received rather poor returns for the risks taken, then PPP investors would presumably not be interested in supporting any future PPP projects.
8. For some possible influences of behavioural economics to PPP decision making, see Hodge and Greve (Citation2019). Academics such as Frick (Citation2008) and Flyvbjerg (Citation2014) have also argued that the psychologically attractive “sublime” characteristics of big projects matter more than the quantified economic benefits and costs, or any VfM calculus. As Flyvbjerg (Citation2014) says, big projects are politically sublime (as politicians build monuments); technologically sublime (as technologists push the possibility envelope); economically sublime (as businesspeople and trade unions generate money and jobs); and aesthetically sublime (as designers produce icons). As one anonymous reviewer commented, real world decision-making depends as much on priorities such as symbolic action and legitimation as on efficiency.
Additional information
Notes on contributors
Graeme Hodge
Graeme Hodge is a former Professor of Law at Monash University. He has worked in both the public and private sectors and has consulted to the OECD, European Commission, United Nations, Asian Development Bank and Commonwealth Secretariat on matters of public policy and regulatory governance. His research interests cover public-private partnerships, privatisation, accountability and regulation and his most recent book was The Logic of Public-Private Partnerships, (Edward Elgar, 2019, with Carsten Greve).
Carsten Greve
Carsten Greve is Professor of Public Management and Governance at the Department of Organization, Copenhagen Business School, where he is co-director of the Center for Public Organization, Value and Innovation (POVI). His research interests are public management reform and public-private partnerships. He is the author of a number of articles and books, including The Logic of Public-Private Partnerships (Edward Elgar, 2019, with Graeme Hodge).