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The determinants of private sector and multilateral development agencies' participation in infrastructure projects

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  • Maria Basilio

    (IP Beja)

Abstract

Much more investment will be needed in developing countries to achieve the Millennium Development Goals, specifically, the goal of reducing poverty. In this respect, private-sector investment is critical, bringing more funds, expertise, and efficiency to the development of projects in several essential areas, like energy, transport, water, and telecommunications. Complementarily, the involvement of Multilateral Development Agencies (MDA) plays an important "enabling" function, acting like a mechanism of risk reduction and enhancing credit. To address these unexplored topics, I perform an empirical analysis of the cross-country determinants of private sector and MDA participation in infrastructure Public Private Partnerships; for this analysis, I use data from developing countries, which was acquired from the World Bank's Private Participation in Infrastructure database. The results suggest the following: the participation of MDA is higher for less populous and poorer countries. Yet neither level of political risk of a country nor respect for human rights seems to play any role in explaining multilateral participation in projects. Concerning private-sector participation, proxies for the country's economic risk are more relevant. The private sector seems to prefer investing in projects located in richer and less populous countries. Also statistically relevant is the country's legal origin and whether the project has MDA participation.

Suggested Citation

  • Maria Basilio, 2010. "The determinants of private sector and multilateral development agencies' participation in infrastructure projects," Portuguese Stata Users' Group Meetings 2010 03, Stata Users Group.
    • Handle: RePEc:boc:psug10:03
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    File URL: http://repec.org/psug2010/PTSUG10.Basilio.pdf
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    References listed on IDEAS

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    1. Jennifer Tobin & Susan Rose-Ackerman, 2003. "Foreign Direct Investment and the Business Environment in Developing Countries: the Impact of Bilateral Investment Treaties," William Davidson Institute Working Papers Series 587, William Davidson Institute at the University of Michigan.
    2. Frederic Blanc-Brude & Hugh Goldsmith & Timo Valila, 2007. "Public-Private Partnerships In Europe: An Update," Economic and Financial Reports 2007/3, European Investment Bank, Economics Department.
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