Public-private Partnership Market Research Articles

Competing with Leviathan: Law and government ownership in China’s public-private partnership market

Despite years of economic reform, government-owned enterprises (GOEs) continue to be prevalent in certain sectors of China’s economy. Drawing on empirical evidence from China’s public-private partnership (PPP) market, this article empirically tests whether the theory of the ownership of enterprise can explain the distribution of GOEs in China. It first conducts an empirical study on the disclosed judgments of Chinese courts to show that the enforcement of PPP contracts remains relatively weak in China, which gives rise to the concern of government opportunism. It then presents empirical evidence that the level of government ownership in each project correlates with the chances of government opportunism, which can be measured by project duration, project sector, and renegotiation terms in the contract. These findings show that the level of government ownership is affected by two competing forces—ownership costs and transaction costs. While GOEs incur relatively high ownership costs, they generally incur lower transaction costs because they can curb government opportunism and thus can outcompete private firms in some projects.

UNLOCKING PRIVATE INVESTMENT BY EXPANDING THE SCOPE OF EXISTING TOLL ROAD PPPs AGREEMENTS

Abstract - The inability of governments in many developing countries to provide basic infrastructure has encouraged the adoption of Public Private Partnership (PPP) schemes. However, many developing countries fail to attract sufficient private investment from the PPP market. This paper develops alternative schemes that can minimize the funding gap and promote sustainable infrastructure investment through modified PPP agreements at later stages of the project life cycle by making special tariff adjustments on existing toll roads. To answer research questions, both conceptual model development and empirical analysis are utilized. The study collects both quantitative and qualitative data for analysis and interpretatio. The results indicate that expanding the scope of existing PPP agreements increases the net present value as it allows for larger cash inflows at the start, leading to a faster payback period. Additionally, this scheme reduces the need for cash deficiency support during the initial period of operation. The alternative schemes encourage lower support for government subsidies, offer a reasonable tariff for users, and provide an attractive investment return for private interests.
 Keywords: Public Private Partnership; Concession Agreement; Toll Road; Sustainable Investment, Funding Gap

Do Emerging Markets Succeed in Implementing Sustainability Principles in Infrastructure Finance? Evidence from Public-private Partnerships in Russia

This paper is the author’s contribution to existing literature on the evaluation of ways to co-create ESG benefits in the process of implementing a public-private partnership (PPP). The author developed his own ESG rating based on a sound set of indicators and an independent evaluation of publicly available information on sustainable development issues. For the purposes of compiling a rating, the specific issues relevant to the evaluation of a PPP project’s sustainability considerations in view of national agenda were analyzed. Based on an analysis of academic literature and publicly available information about similar ratings, the author proposes an approach to measuring these issues and incorporating the results in the integrated ESG impact rating. The developed ESG benefit evaluation instrument may be used by institutional, private and state PPP market participants for a comprehensive analysis of their investment activity. The case analysis of two PPP projects from Russian practice revealed failures in Russian corporate governance practices in the process of investing in infrastructure; in addition, we propose potential ways of overcoming some of the difficulties based on case comparison. This paper provides a new outlook on the methodology of a PPP-adjusted ESG rating that is relevant for evaluating and monitoring of corresponding investments in infrastructure.

A time differencing qualitative comparative analysis (QCA) of public-private partnership (PPP) market maturity

ABSTRACT This study examines how institutional change affects public-private partnership (PPP) market maturity. Using a novel Time Differencing Qualitative Comparative Analysis (QCA) method, the institutional settings of 19 different PPP markets across Latin America and the Caribbean (LAC) were analysed between 2009 and 2014. The results show enhancing the regulatory framework and institutional knowledge are necessary in order to increase PPP market maturity in most cases. However, a deteriorating investment climate coupled with a weaker regulatory framework led to declines in PPP market maturity. This suggests that the influence of institutional change on PPP market maturity is not symmetrical.

Financial mechanism of public-private partnership: features and directions of improvement

In recent decades, projects in the field of infrastructure and public-private partnership (PPP) have become increasingly interesting for both the public sector and private investors. In Russia, the option of cooperation between the state and business started developing and spreading not so long ago (in the last 15-20 years). Despite the fact that until 2019, the PPP market in Russia showed a positive trend in various parameters and actively developed, there has been a slowdown in the growth rate of the number of PPP projects since 2020 (3,440 projects in 2020 against 4,285 projects in 2019), which is due to many factors, such as: an increase in the cost of construction materials, a general increase in prices, an increase in inflation, the COVID-19 pandemic, a reduced level of effective demand, an unstable geopolitical situation, etc. At the same time, the total volume of investments in PPP projects continues to grow. Rapid urbanization, changing environmental, social and economic priorities place increasing demands on the ability of governments to attract private finance and motivate companies to develop synergistically with the state. Improving public-private partnership and scaling it up among the corporate sector in Russia is one of the key areas of government activity in order to create better conditions for connecting people and places with opportunities. The purpose of the article is to study the theoretical and practical features of public-private partnership and its financial mechanism, as well as to identify promising areas for solving problems that hinder the effective implementation of projects within the framework of public-private partnership. The subject of the study is an aggregate of economic and organizational-legal relations that contribute to the formation and implementation of the financial mechanism of public-private partnership projects. The methodological basis was the conceptual provisions of the theory of public-private partnership, scientific methods and techniques of analysis. The scientific novelty of the work lies in the fact that the results of the study (in terms of identifying key problems that hinder the effective functioning of PPP projects and their financial mechanism) allowed us to formulate a set of recommendations for their solution.

Competing with Leviathan: Law and Government Ownership in China’s Public-Private Partnership Market

Competing with Leviathan: Law and Government Ownership in China’s Public-Private Partnership Market

Анализ создания регионального резерва финансовых и материальных ресурсов для реагирования на чрезвычайные ситуации

The creation and replenishment of the reserve of financial and material resources for emergency response includes a wide range of processes and operations. In the region under consideration (Bryansk region) a mechanism for forecasting the need, creation, storage and replenishment of resources for the elimination of natural and man-made emergencies, their receipt and delivery to the affected territories has been formed and is functioning. The funds allocated by the regional budget are not enough to purchase the planned amounts of material resources for the formation of emergency response reserves, therefore, the regional state authorities are looking for additional sources of cash receipts to solve these problems. Currently, projects related to attracting private business resources are relevant. However, the current regulatory framework significantly limits the possibilities of using the resources of the private sector of the economy. The solution is to implement projects based on the principles of public-private partnership. The public-private partnership market in Russia is constantly growing, but the possibilities of using private sector resources to create reserves for responding to emergencies in the region are not being used. In order to ensure mutually beneficial cooperation between the state and business in solving this issue, it seems appropriate to build relations between the state and business on the basis of concession agreements.

Government subsidies and the development of PPP projects: evidence from China

ABSTRACT Based on micro data on public-private partnership (PPP) projects in China, this study adopts the survival analysis model and the difference-in-difference-in-differences (DDD) method to explore the effects of government subsidies on PPP project development. We investigate PPP project development from the perspective of contract signing and construction commencement, making an original contribution to the existing literature. We find that government subsidies can promote the faster signing of PPP contracts but cannot promote on-time construction commencement of PPP projects. This is because government subsidies do not solve the financing constraints that restrict the commencement of PPP project construction. Additionally, government subsidies can promote the faster signing of PPP contracts and on-time construction commencement of PPP projects in areas with high PPP market transparency.

The mechanism of public — private partnerships for the implementation of innovative projects entailing the construction and reconstruction of items of federal property

Introduction. The relevance of the research stems from the limited financial capabilities available for complete or partial renovation of the federal property fund, which is in the operating management of subordinate institutions of executive authorities. The problem of applying the mechanism of public-private partnerships (PPPs) to such projects is associated with a narrow focus of the practice of its application. The purpose of the study is the systematic presentation of the organizational and economic PPP mechanism applied to the reconstruction and construction of real estate facilities comprising the federal property fund. The objectives of the research are to analyze the theoretical and methodological aspects of implementation of PPPs, present the analysis of the PPP market, propose a PPP implementation pattern for the reconstruction and construction of real estate facilities comprising the federal property fund, taking into account the use of innovative technologies in the construction sector.
 
 Materials and methods. The authors take advantage of the materials provided by the Russian and international organizations, such as the official publications of the National PPP Centre (analytical reviews published on the Rosinfra website), investment and analytical company InfraOne Research, National Association of Infrastructure Companies (NAIK), World Bank reports, and research publications. Traditional methods of synthesis, induction, deduction, and analogy were used in the course of research.
 
 Conclusions. The analysis of effectiveness of federal property management has proven the need to use the PPP mechanism. This mechanism has accumulated the experience of practical implementation of infrastructure projects. However, despite the existing implementation potential of the subject area, some limitations prevent its widespread use. The paper provides a detailed analysis of the proposed PPP mechanism and the pattern for its implementation.

Opportunities and Challenges for Foreign Undertakings in China’s PPPs Market

Public-private partnerships (PPPs) refer to arrangements between the public sector and the private sector, in which they share rewards, responsibilities and risks. PPPs are mainly used to deliver infrastructure and public services. In the recent decade, China has witnessed rapid growth in both the number and investment scale of PPPs projects. With the promotion of sustainable development in the 13th Five-Year Plan, the Chinese government starts to take sustainability into considerations when carrying out PPPs projects. Different from traditional command-and-control measures that impose explicit policy orders on private sectors, PPPs function as a market-based instrument (MBI) that gives private sectors a nudge stimulating their innovation in the market competition. In China's PPPs market, the proportion of foreign investment has been declining in recent years. The 14th Five-Year Plan released in early 2021 emphasises the importance of involving foreign investors to realise sustainable development goals in the coming five years. The Chinese government has released supplementary rules to strengthen the confidence of foreign investors in Chinese PPPs projects. This article sorts out current regulations that directly affect foreign companies’ participation in China’s PPPs projects, further exploring both opportunities and challenges for foreign companies to compete in China’s PPPs market. Keywords: public-private partnerships, PPPs, foreign direct investment, FDI, sustainable development, China

Sources of Finance for Public-Private Partnership (PPP) in Poland

Abstract This paper aims to present and discuss the already existing studies and try to uncover possible potential for further research on the topic of financial resources in public–private partnership (PPP) projects. The article presents the main relevant papers regarding financial resources and examines how deep the topic of financial sources has been explored in both academic and practical literature. Moreover, the article reviews Poland’s PPP market and, particularly, types of used financial sources. The ‘Literature review’ results show that there is a gap in studying the private sector and financial resources, especially in Polish PPPs. We attempt to close this gap by summarising the main factors that influence the choice of the source of financing PPPs. The Polish case shows that the main source of financing of PPP projects in Poland is bank loans and many projects have partial funding from various European Union (EU) programmes. Policymakers should pay attention to other financial resources in PPPs. Moreover, it would be fruitful to extend the Polish database of PPP projects with new factors that can simplify ex-post and ex-ante analysis.

The Growth of China’s Non-governmental Space Sector in the Context of Government Support for Public-Private Partnerships: An Assessment of Major Legal Challenges

The effectiveness of public-private partnerships (PPPs) has been emphasized in Chinese policy-making discourse in recent years, and policies have been introduced to promote the adoption of PPPs. A 2016 White Paper on China’s space activities advocated for policies that encourage ‘social forces’ (including non-governmental space entities) to participate in space development. The White Paper proposed amending the government procurement process of space products and services and facilitating cooperation with the private space sector. Furthermore, ‘satellite internet’ was introduced into the scope of space policy as a new type of infrastructure, providing opportunities to establish PPPs in space programs. Nonetheless, the military-dominated nature of space exploration has resulted in a complicated administration and strict supervision of non-governmental entities in order to develop space activities, including launching satellites. In addition, government-owned enterprises, commonly acknowledged as ‘public’ parties of PPPs, are counted among the ‘social forces’ authorized to act as ‘private’ parties in the Chinese PPP market. Therefore, favorable PPP policies are applied to public entities. This impedes the growth of underdeveloped non-governmental space entities, and as such, this is an issue that needs to be addressed. From a national space legislation perspective, clear and supportive rules for non-governmental space activities administration and permissions of operation should be established. Concerning PPP rules, based on fully considering existing laws, measures ought to be taken to improve the procurement measures of space products and services. Moreover, rules concerning the ‘value for money’ evaluation criteria and other details deserve to be created or improved upon to ensure non-governmental participants benefit in PPP programs conducted with public partners.

DELIVERY OF PUBLIC SERVICES BY LOCAL SELF-GOVERNMENT UNITS SUPPORTED BY PUBLIC-PRIVATE PARTNERSHIP

Contents included in this paper relate to problematic of delivery of public services on the principles of cooperation between public party and private party. The aim of this article comes down to assessment of development of public-private partnership in Poland from the realization of public services point of view. At the beginning of this consideration the role of self-government in process of satisfying common citizens’ needs has been highlighted. In this area particular attention has been paid to issue of public services, within which definition and their classification have been shown. Possibility of external entities’ participation in the process of public services realization has been also underlined. Emphasis has been placed on public-private partnership. In this context theoretical assumptions of this cooperation form have been presented, moreover current, national regulation and cooperation categories widespread in EU countries have been highlighted. Analysis of public-private partnership market in Poland with regard to contracts concluded in order to delivery of public services by local governments has been carried out. At the end conclusions and directions of further research have been indicated.

Stakeholders of public-private partnerships in Poland: an analysis of an evolving phenomenon

Purpose According to the growing role of stakeholders in the implementation of public-private partnership (PPP) initiatives, the purpose of this study is to diagnose the maturity of PPPs in Poland, taking into account the range of stakeholders’ participation in public-private initiatives. Design/methodology/approach The introductory study on the stakeholders of PPPs has been based on the report analysis of Polish initiatives and the case studies’ comparative analysis. The cases represent touristic projects realized within PPPs. Findings The results of the study indicate that the PPPs’ personal context, though recognized internationally, is to a very low extent present in the Polish case. As the PPP market is still in the process of development, the stakeholders’ issue should be taken into consideration in the processes of the PPP development in Poland. Practical implications As regional development is continuously a key issue, especially in rural areas context, the PPP initiatives are of great importance, and therefore the discussion of pros and cons in this context may contribute to the legislation at the regional level. Originality/value The study sheds some light and gives some interesting perspectives on the issue of the personal context of PPPs and social capital. Also, the text describes the path of developing PPPs in Poland and especially the touristic projects. The research part presents the original case study comparative analysis based on table-oriented form and as such enables the new way of contextual analysis.

Policy uncertainty and firm-level investment: evidence from public-private partnership market in China

ABSTRACT This paper focuses on the subfield of Public–Private Partnership (PPP), and explores the relationship between policy uncertainty and firm-level investment. Based on the analysis of 905 central-level documents, one novel contribution of this paper is to construct an index of PPP policy uncertainty. We find evidence supporting that the gambling between central government departments is the main cause of policy uncertainty, which further leads to less investment by firms. Compared with other traditional indexes, the construction based upon policy text sheds light on risk management.

On Trends in Infrastructure Development Using the Public-Private Partnership Mechanism in the G20 Countries

Aim. The presented study aims to examine project initiatives and proposals for improving funding mechanisms for infrastructure projects based on public-private partnership in the Russian Federation.Tasks. The authors consider approaches and project initiatives of the G20 countries pertaining to the implementation of public-private partnership projects in the context of the adaptation of infrastructure projects to the Russian market (for the purpose of improving the quality and efficiency of the implementation of infrastructure projects in the Russian market).Methods. The methodological basis of this study includes works of Russian and foreign researchers in the field of public-private partnership and project financing. The authors use methods of scientific research (expert and comparative analysis, grouping and generalization) selected in accordance with the goals and objectives of the study as well as information publicly available on the official websites of the ROSINFRA platform and the Ministry of Economic Development of the Russian Federation.Results. Comparative analysis of foreign and national practices in the public-private partnership market makes it possible to identify a number of potential initiatives, including a new approach to the examination of infrastructure projects and proposals for attracting additional investment resources to the public-private partnership market. Adaptation of foreign competencies to the Russian public private partnership market will drive the transformation of the current PPP project model in Russia.Conclusions. Analysis of methods used by the G20 to assess and implement infrastructure projects based on public-private partnership makes it possible to formulate potential initiatives and proposals for improving approaches to the implementation of infrastructure projects based on public-private partnership in the Russian market and to determine the development vector for the national infrastructure project model.

Sustainable and Optimal “Uniqueness” Contract in Public-Private Partnership Projects of Transportation Infrastructure

To control the “uniqueness” risk in Public-Private Partnership (PPP) projects of transportation infrastructure, we design a simplified “uniqueness” contract model by incorporating the impact of the initial investment which is based on the Bertrand model. The nonlinear programming method is adopted to derive the optimal “uniqueness” contracts for incumbent private capital, the public, and the social welfare, respectively. The simulation results show that the achievement of the optimal “uniqueness” contract is essentially the result of a compromise between the private capital, the public, and social welfare. The extent to which such a contract reduces the probability of “uniqueness” risk mainly depends on the equilibrium relation between the interests of private capital and the public. The initial investment is not related to the government default when the contract does not take into account the interests of the private capital. Furthermore, the “uniqueness” contracts between private capital and the government are mainly for anticompetitive purpose in the PPP market of transportation infrastructure. Unless the contract terms focus on the improvement of social welfare, entering a “uniqueness” contract will cause social welfare losses.

Production and Securitization of Foregin Infrastucture by “Team Korea”

AbstractThe financialization of infrastructure has emerged as a resolution for alleviating government budget pressures derived from chronic underinvestment in infrastructure and post-global financial crisis recession. Two interrelated phenomena are considered central features of the financialization of infrastructure: the transformation of infrastructure into an alternative asset class and the growth of public–private partnerships (PPPs) in infrastructure development. In particular, the expansion of global PPPs has attracted the attention of various entities, including state-owned enterprises (SOEs). Recently, SOEs have participated in foreign infrastructure PPPs as private sector entities. Unlike conventional private sector involvement in infrastructure PPPs, SOEs aim to achieve public objectives and mobilize both public and private resources to enhance competitiveness within the global PPP market. In this paper, the specificities of SOEs participating in foreign infrastructure PPPs and their implications for the financialization of infrastructure are analyzed using a South Korean SOE: Korean Overseas Infrastructure and Urban Development Corporation (KIND). This reveals why and how SOEs engage in foreign infrastructure PPPs via the drivers and business strategies of KIND. Moreover, it examines infrastructure PPPs managed by KIND to reveal how the business strategies of KIND work in practice. Consequently, this paper suggests that SOEs engaging in foreign infrastructure PPPs attempt to achieve policy objectives through the production and financialization of foreign infrastructure. In the process, SOEs actively take advantage of entities and resources from both the public and private sectors.

The influence of governance on the implementation of Public-Private Partnerships in the United Kingdom and China: A systematic comparison

Although Public-Private Partnerships (PPPs) have been widely implemented in a number of countries, their development and governance contexts are different. This research investigates PPPs through the lens of governmentality and develops a systematic and innovative analytical framework to evaluate and compare the PPP governance in China and the United Kingdom. Based on the findings, a conceptual model is proposed to illustrate the conducting of PPP governance, by the governments involved. The research contributes to the literature on the governance of PPP by providing a clear framework and an assessment tool. The result can benefit the policymakers in different countries, in assessing and improving the efficiency and effectiveness of their PPP governance in practice, hence helping the decision-making of government in identifying and targeting loopholes in their PPP market.

Has the latest global financial crisis changed the way road public-private partnerships are funded? A comparison of Europe and Latin America

A financial/economic crisis may have an adverse effect on transport public-private partnerships (PPPs) as both traffic demand is negatively influenced, and governments are further under pressure. However, research on awarded road PPP contracts over a 20-year period in the European Union (EU) and Latin America and the Caribbean (LAC) showed that the market slowdown is brief and followed by a re-bounce leading to an overall upward trend. The LAC region has experienced multiple financial setbacks with no significant change in the PPP market structure as opposed to the EU, where significant changes were observed concerning a shift in the remuneration schemes employed.