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Can PPPs Help Close the Infrastructure Gap in the Transition Economies?


  • Geoffrey Hamilton

    () (United Nations Economic Commission for Europe)


This paper dealing with financing development addresses how public infrastructure can be paid for and managed in an environment where public resources are limited but the investment needs for these services are great. This is a characteristic that succinctly describes many of the emerging markets of the region. With insufficient resources in government budgets there has been a need and an increasing tendency to rely more on the private sector to build, maintain and manage infrastructure projects. Public-private partnerships (PPPs) represent a flexible institutional arrangement that allows the public and private sectors to share responsibility in achieving social objectives with specific responsibilities entrusted to the entity that can accomplish it most effectively. However, as with any other institutional structure, the devil is in the details, and in many of the transition economies in the 1990s the details were not appropriately designed. This paper analyses what is required for governments to be able to effectively use this financial model. Seven lessons are provided based upon an analysis of many PPPs that have been implemented in a number of different sectors and countries. In addition, it is emphasized that the effective use of PPPs, which properly considers developmental objectives, can help society not only achieve the cost-effective provision of services but can also increase accessibility of services to the poor and to geographically disadvantaged regions.

Suggested Citation

  • Geoffrey Hamilton, 2008. "Can PPPs Help Close the Infrastructure Gap in the Transition Economies?," UNECE Annual Report Economic Essays 2008_4, UNECE.
  • Handle: RePEc:ece:annrep:2008_4

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    File Function: First version, 2008
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    More about this item


    Financing for development; infrastructures; public-private partnerships; Europe; transition economies; savings; investment;

    JEL classification:

    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • H42 - Public Economics - - Publicly Provided Goods - - - Publicly Provided Private Goods
    • H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures
    • H72 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Budget and Expenditures
    • L90 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - General
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance


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