Public private partnerships, the levels of public investment and the New Member States
Some of the features of public private partnerships (PPP) are outlined. The arguments that PPPs provide additional investment are critical examined, and the way in which the accounting treatment may influence the use of PPPs are examined. The costs of PPPs are compared with ‘conventional’ public investment and it is argued that PPPs are a relatively expensive way of undertaking public investment. The idea that PPPs effectively transfer risk from government to private companies is assessed. Issues relating to the nature of contracts under PPPs, the transactions costs and the implementation of the contracts, are briefly considered. For the new member states, it is suggested that national accounting rules and perceived constraints on budget deficits may encourage the use of PPPs, even if that use is not warranted in terms of costs of public investment.
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- Rees, Ray & Foldes, L. P., 1977. "A Note on the Arrow-Lind Theorem," Munich Reprints in Economics 3416, University of Munich, Department of Economics.
- Heald, David, 1997. "Privately Financed Capital in Public Services," The Manchester School of Economic & Social Studies, University of Manchester, vol. 65(5), pages 568-598, December.
- Arrow, Kenneth J & Lind, Robert C, 1970. "Uncertainty and the Evaluation of Public Investment Decisions," American Economic Review, American Economic Association, vol. 60(3), pages 364-378, June.
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