When and How to Use Public-Private Partnerships in Infrastructure: Lessons from the International Experience

37 Pages Posted: 18 Feb 2020 Last revised: 21 Aug 2021

See all articles by Eduardo Engel

Eduardo Engel

University of Chile

Ronald D. Fischer

University of Chile - Center of Applied Economics (CEA)

Alexander Galetovic

Universidad Adolfo Ibáñez; Stanford University - The Hoover Institution on War, Revolution and Peace; University of Padua - CRIEP

Date Written: February 2020

Abstract

Public-private partnerships (PPPs) have emerged as a new organizational form to provide public infrastructure over the last 30 years. Governments find them attractive because PPPs can be used to avoid fiscal check-and-balances and increase spending. At the same time, PPPs can lead to important efficiency gains, especially for transportation infrastructure. These gains include better maintenance, reduced bureaucratic costs, and filtering white elephants. For these gains to materialize, it is necessary to deal with the governance of PPPs, which is more demanding than for the public provision of infrastructure. The governance can be improved by the use of contracts with appropriate risk allocation and by avoiding opportunistic renegotiations, which have been pervasive. The good news is that, based on the experience with PPPs over the last three decades, we have learnt how to address these challenges.

Suggested Citation

Engel, Eduardo and Fischer, Ronald D. and Galetovic, Alexander, When and How to Use Public-Private Partnerships in Infrastructure: Lessons from the International Experience (February 2020). NBER Working Paper No. w26766, Available at SSRN: https://ssrn.com/abstract=3539333

Eduardo Engel (Contact Author)

University of Chile ( email )

Ronald D. Fischer

University of Chile - Center of Applied Economics (CEA) ( email )

Republica 701
Casilla 2777
Santiago
Chile
+56/2/678 4055 (Phone)
+56/2/689 7895 (Fax)

Alexander Galetovic

Universidad Adolfo Ibáñez ( email )

Peñalolén
Santiago
Chile

Stanford University - The Hoover Institution on War, Revolution and Peace ( email )

Stanford, CA 94305-6010
United States

University of Padua - CRIEP ( email )

Padua
Italy

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