The perspectives of public-private partnership implementation as the instrument of infrastructure development in Ukraine

Abstract

Infrastructure development stands out among the prime goals of an economy’s social and economic trajectory. Being a major driving force of wellbeing, economic growth strongly depends on infrastructure. An increase in capital investments in infrastructure has a comprehensive positive effect on an economy. Public-private partnership (PPP) is of particular importance for an efficient economic development strategy, especially for that of an emerging economy. Providing for sustainable economic growth is a struggle for emerging economies due to a wide spectrum of negative features they possess such as poor governance, corruption and widespread poverty. Involvement of private investment in terms of PPP leads to a decrease in government expenditures. Creating a favorable environment for PPP precedes a rapid increase in the number of private companies willing to compete for those contracts. Hectic competition expedites the establishment of the market economy, which is a reasonable conclusion to an emerging economy. Competing for a tender coerces private parties to generate as innovative approaches as possible in order to win. Maintaining a constantly increasing share of innovative activity in constructing and operating infrastructure is a viable opportunity to make a highly urbanized area gain a momentum towards more sustainable environment. Being a means of promoting green and smart technologies, PPP enables expediting integration into the global economy. Encouraging PPP facilitates globalization. Widespread utilization of PPP contracts in governmental procurement transfers risks related to construction and maintenance of infrastructure to private parties. Sustaining a creditworthy institutional and regulatory environment mitigates high sensitivity of PPP to crisis and derivative events. Ukraine is highly likely to significantly benefit from PPP. Considering Ukraine’s strong intention to integrate into the European Union, PPP may help to boost infrastructure development. It is recommended for Ukraine to follow the principle of reciprocate motivation in order to succeed in establishing an efficient mechanism of PPP development.