Public-Private Partnerships and Gross Domestic Product Growth: Evidence from the Eurozone

Purpose: This study investigates the impact of Public-Private Partnerships (PPPs) on the gross domestic product (GDP) of the Eurozone from 2014 to 2021. Design/Methodology/Approach: Based on relevant literature review we analyze officially published data from the World Bank and the European PPP Authority. The dual research question we seek to answer is whether infrastructure PPP projects complement or substitute traditional government expenditures, and how they affect GDP, in the case of the Eurozone. Since the global financial crisis of 2008 and the ensuing Eurozone debt crisis (2010-’18), within the framework imposed by the financialization era, it is a common experience the fiscal constraints faced by governments that have to discipline the capital markets from which they borrow. We explore descriptively the effectiveness of PPPs as a development tool and their impact on GDP growth. Findings and Limitations: No significant number of articles found either on the PPPs influence on GDP growth or their effects on different sectors of the economies. Developing and state-dominated economies seem to be involved in significantly more PPP contracts than European ones. We found, however, that the latter are pursuing a similar intention to engage with the institution. Due to descriptive analysis the study uses we are unable to draw either inductive conclusions or about the causality of PPPs on GDP growth. Practical Implications: We cannot reject the hypothesis that PPPs positively contribute to GDP change, in mature economies and especially in the Eurozone case. Additionally, we observe that the PPP-GDP growth relationship varies depending on several macroeconomic factors. Thus, our study shows that contemporary governments could use PPPs as a complement in their development economic policies which have limited tools. Originality/Value: This paper provides an updated and comprehensive analysis of the need for PPPs, even though the lack of statistical data prevented us from making inductive inferences.