Abstract
The provision of infrastructure and related services in developing Asia via public–private partnership (PPP) increased rapidly during the late 1990s. Theoretical arguments support the potential economic benefits of PPPs, but empirical evidence is thin. This paper develops a framework identifying channels through which economic gains can be derived from PPP arrangement. The framework helps derive an empirically tractable specification that examines how PPPs affect the aggregate economy. Empirical results suggest that increasing the ratio of PPP investment to GDP improves access to and quality of infrastructure services, and economic growth will potentially be higher. But this optimism is conditional, especially on the region’s efforts to further upgrade its technical and institutional capacity to handle complex PPP contracts.
Highlights
An abundance of theoretical and empirical evidence recognizes the vital role of infrastructure to stimulate and sustain economic growth
This paper looks at the policy implications of this for developing economies in Asia that badly need more infrastructure, but do have limited resources and capacity to handle the complex processes of private partnership (PPP) projects
We are interested in the variable, PPP investment as percentage of gross domestic product (GDP), to determine how PPPs potentially affect both access and quality of infrastructure services, which are identified as channels through which PPPs can deliver macroeconomic benefits
Summary
An abundance of theoretical and empirical evidence recognizes the vital role of infrastructure to stimulate and sustain economic growth. Empirical evidence indicates a significant positive macroeconomic contribution of PPPs. Following on from this, PPPs—and especially social and pro-poor infrastructure—has an essential role to play in efforts to reduce poverty by improving access to infrastructure and markets. Endogenous growth models have been developed (e.g., Barro 1990, and Futagami, Morita, and Shibata 1993) to examine the impact of infrastructure on long-term production and income levels. Calderón and Servén (2010) find robust evidence that an increase in infrastructure stock and better quality infrastructure services has positive impact on long-term growth and a negative impact on income inequality. Kodongo and Ojah (2016), in a study on Sub-Saharan countries during 2000–2011, find that spending on infrastructure and increasing access to it significantly influences economic growth and development, with the lower-income countries in the region benefiting the most. Deriving Macroeconomic Benefits from Public–Private Partnerships in Developing Asia | 5
Sign-in/Register to view highlights & summary Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
