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Institutional and Political Determinants of Private Participation in Infrastructure

Author

Listed:
  • Marian Moszoro

    (The World Bank)

  • Gonzalo Araya

    (The World Bank)

  • Fernanda Ruiz-Nuñez

    (The World Bank)

  • Jordan Schwartz

    (The World Bank)

Abstract

We assembled a large panel of project-level technical and financial data and country-level economic, institutional, political, and governance variables to assess the determinants of private financing of infrastructure in emerging markets and developing economies. Controlling for economic characteristics, we find that overall private participation of infrastructure financing increases with freedom from corruption, rule of law, quality of regulations, and decreases with court disputes. We provide plausible explanations of deviations from this pattern when data is disaggregated at the sectoral level. We also found that legal systems—types of democracy or dictatorship—do not play a role in whether the private sector invests in infrastructure. Our results do not vary when controlling for income inequality and across quartiles of experience, country wealth, and wealth per capita. The study shows that upstream “enabling” institutions, policies, and regulations and sector economics need to be addressed simultaneously to facilitate private infrastructure investment financing.

Suggested Citation

  • Marian Moszoro & Gonzalo Araya & Fernanda Ruiz-Nuñez & Jordan Schwartz, 2014. "Institutional and Political Determinants of Private Participation in Infrastructure," International Transport Forum Discussion Papers 2014/15, OECD Publishing.
    • Handle: RePEc:oec:itfaab:2014/15-en
    DOI: 10.1787/5jrw2xzj0m7l-en
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    Cited by:

    1. Cepparulo, Alessandra & Eusepi, Giuseppe & Giuriato, Luisa, 2020. "Public finances and Public Private Partnerships in the European Union," MPRA Paper 103918, University Library of Munich, Germany.
    2. Marian Moszoro & Gonzalo Araya & Fernanda Ruiz-Nuñez & Jordan Schwartz, 2015. "What Drives Private Participation in Infrastructure Developing Countries?," Palgrave Macmillan Books, in: Stefano Caselli & Guido Corbetta & Veronica Vecchi (ed.), Public Private Partnerships for Infrastructure and Business Development, chapter 0, pages 19-44, Palgrave Macmillan.
    3. Gultom, Yohanna M.L., 2021. "When extractive political institutions affect public-private partnerships: Empirical evidence from Indonesia's independent power producers under two political regimes," Energy Policy, Elsevier, vol. 149(C).
    4. Berg, Sanford V. & Phillips, Michelle A., 2017. "Data availability as a key tool for regulating government-owned water utilities," Utilities Policy, Elsevier, vol. 49(C), pages 30-37.
    5. Jie Yang & Wuqing Wu & Xiao Mao & Zongwu Cai, 2019. "Quantile Analysis Of Investment In Private Participation In Infrastructure Projects," Annals of Financial Economics (AFE), World Scientific Publishing Co. Pte. Ltd., vol. 14(01), pages 1-26, March.

    More about this item

    Keywords

    bureaucracy; corruption; regulation; rule of law;
    All these keywords.

    JEL classification:

    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
    • H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures
    • L33 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Comparison of Public and Private Enterprise and Nonprofit Institutions; Privatization; Contracting Out
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • R42 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Government and Private Investment Analysis; Road Maintenance; Transportation Planning

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