_______________________________________________________________
*****
Handbook on PPPs in developing and emerging economies
Editors: João Leitão (University of Beira Interior, Portugal); Elsa de Morais Sarmento (Universidade de Aveiro, Portugal); João Aleluia (United Nations Economic and Social Commission for Asia and the Pacific)
For over two decades, the debate on whether Public-Private Partnerships (PPPs) bring about benefits for developing and emerging countries has been fueled by a stream of new evidences. The future of sustainable infrastructure and service provision in these regions will depend on the ability of national and local authorities to gauge on their capital and capacity for effective delivery, and on the reliance on partnerships between the public and the private sector.
During the recent financial crisis, the overall number of PPP projects continued to grow steadily along with financial flows. However, regional concentration of PPP investments in a few economies has been perpetuated, as upper middle income countries are still the major recipients of private participation in infrastructure.
Today, a considerable amount of capital investment is still needed for infrastructure improvement in less developed countries. The public sector is usually not able, per se, to deliver the resources needed to assure access to basic public goods and services, and private sector engagement is considered essential to close this gap. Many countries have favored the financing of such demands via PPPs, looking for positive impacts on the efficiency, equity and quality of public service provision, through increased competition and the active participation and commitment of private counterparts. Particularly in a context of financial restraint and economic deceleration, PPPs have gained relevance, being perceived as an anti-cyclical instrument to stimulate growth and alleviate poverty.
PPPs development role needs to be put into perspective and assessed against at least six main criteria: fiscal/financial viability, efficiency, governance, value for money, equity and poverty alleviation, and environmental and social sustainability. Some of its emerging trends relate to greater risk aversion following the financial crisis, the availability of smaller-scale providers, the rising of a variety of new financiers, innovative financial instruments, the role of good governance, a new generation of global goods, and sustainability issues.
Under the current circumstances, it is unlikely that many countries at the bottom of the development pyramid can meet this daunting challenge on their own. Most emerging and developing economies still need to meet international agreed minimum standards for infrastructure and regulatory oversight, this being primarily not a financial challenge, but a problem of good governance and political will. Thus, decisions to invest in developing and emerging economies seem to be relatively more determined by factors related to the institutional environment and governance framework, the economic and political predictability, the market dimension and the end-user purchasing power. Emerging markets also struggle with immature financial markets and a lack of bankable projects as investments in basic infrastructure often require substantial hard currency investments, which compromises local private fund raising. Developing and emerging countries often find themselves struggling to attract FDI in parallel to forming PPPs, as long-term finance needs to come from external financiers.
Understanding how the international community can better make PPPs work for development by surpassing these obstacles and how best to get developing and emerging countries' private sector involved in a more inclusive type of growth is critical in times of public finance restraint.
Main questions:
1. Do PPPs work for the poor in developing and emerging economies?
2. What are the drivers of success and failure of PPPs implementation in developing and emerging economies?
3. How are efficiency gains distributed and what do they depend upon?
4. How much does public policy, governance and sustainability matter to ensure readiness and absorption of PPPs?
5. How can outcomes, impacts and lessons learned be better monitored, evaluated and internalized?
6. What is the trend across sectors and regions, and what can be expected on the way forward?
Recommended topics include, but are not limited to, the following: