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When and How to Use Public-Private Partnerships in Infrastructure: Lessons From the International Experience

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  • Eduardo Engel
  • Ronald D. Fischer
  • Alexander Galetovic

Abstract

Public-private partnerships (PPPs) have emerged as a new organizational form to provide public infrastructure over the last 30 years. Governments find them attractive because PPPs can be used to avoid fiscal check-and-balances and increase spending. At the same time, PPPs can lead to important efficiency gains, especially for transportation infrastructure. These gains include better maintenance, reduced bureaucratic costs, and filtering white elephants. For these gains to materialize, it is necessary to deal with the governance of PPPs, which is more demanding than for the public provision of infrastructure. The governance can be improved by the use of contracts with appropriate risk allocation and by avoiding opportunistic renegotiations, which have been pervasive. The good news is that, based on the experience with PPPs over the last three decades, we have learnt how to address these challenges.

Suggested Citation

  • Eduardo Engel & Ronald D. Fischer & Alexander Galetovic, 2020. "When and How to Use Public-Private Partnerships in Infrastructure: Lessons From the International Experience," NBER Working Papers 26766, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:26766
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    References listed on IDEAS

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    Cited by:

    1. Inderst, Georg, 2020. "Social Infrastructure Finance and Institutional Investors. A Global Perspective," MPRA Paper 99239, University Library of Munich, Germany.
    2. Alex G. Miranda-Poggys & Marzia Morena, 2023. "A Critique on Public–Private–People Partnerships: From a Definitional Inconsistency to the Partnering Dilemma in Today’s Housing Conjunction," Sustainability, MDPI, vol. 15(6), pages 1-21, March.
    3. Bonifaz, José L. & Saavedra, Eduardo H., 2023. "Aggressive bidding and the renegotiation of concession contracts: Empirical evidence from Peru," Utilities Policy, Elsevier, vol. 85(C).
    4. Engel,Eduardo & Ferrari,Martín & Fischer,Ronald & Galetovic,Alexander, 2022. "Managing the Fiscal Risks Wrought by PPPs : A Simple Framework and Some Lessons from Chile," Policy Research Working Paper Series 10056, The World Bank.
    5. Engel, Eduardo & Fischer, Ronald D. & Galetovic, Alexander, 2024. "The company you keep: Renegotiations and adverse selection in transportation infrastructure," Economics of Transportation, Elsevier, vol. 38(C).
    6. Deborah de Lange, 2023. "Sustainable Transportation for the Climate: How Do Transportation Firms Engage in Cooperative Public-Private Partnerships?," Sustainability, MDPI, vol. 15(11), pages 1-21, May.
    7. Ginés de Rus, 2024. "Inversión en infraestructuras. La necesidad de reestructurar el modelo concesional español," Fedea Economy Notes 2024-03, FEDEA.
    8. Wolfstetter, Elmar G., 2022. "Universal high-speed broadband provision: A simple auction approach," Information Economics and Policy, Elsevier, vol. 60(C).

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    JEL classification:

    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • H42 - Public Economics - - Publicly Provided Goods - - - Publicly Provided Private Goods
    • H83 - Public Economics - - Miscellaneous Issues - - - Public Administration

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