On the Development of Public–Private Partnerships in Transitional Economies: An Explanatory Framework

Abstract

This article develops a generic framework to explain the environment for public–private partnership (PPP) development in transitional economies. The framework stands on a tripod that includes the market, the operating environment, and the government, each containing several factors that support aspects of PPPs. The authors apply the framework to analyze the results of a multicountry survey in an effort to identify key factors that facilitate PPP development in transition countries. The identified factors are market potential, institutional guarantee, government credibility, financial accessibility, government capacity, consolidated management, and corruption control. The framework and identified factors may serve as effective tools to diagnose and monitor PPP development in a broader array of countries. The framework is applied in analyzing data from four transitional economies and several advanced economies. The efficacy of the framework is further justified by its explanatory power of PPPs’ practicality and is largely confirmed by results from a sensitivity test.

A Conceptual Framework for Managing Risks in Public Private Partnership Projects in Housing Estate Development in Nigeria

“…In order to develop an effective PPP, a market must exist such that PPP projects are profitable to undertake, the private party is willing to participate and the financial market is willing to invest (Yang, Hou, & Wang, 2013). Hence successful PPP arrangement requires a strong market structure to support profitability goal of the private sector.…”

“…Government credibility is enhanced by factors such as availability of political checks and balances, an independent juridical system, and independent regulation. In transitional economies, lack of credibility among participating (Yang, Hou, & Wang, 2013). Some governments in transitional economies promise more than they can deliver to attract foreign investment (Ho, 2006).…”

“…These elements are identified through thorough analysis of PPPs. In assessing the role of government agencies in PPPs in housing delivery in Nigeria, Ibem (2010) stressed that, PPP projects are generally characterized by the PPP structure, the contextual and intervening factors sometimes referred to as operating environment (Yang, Hou, & Wang, 2013) and PPP outcome. These characteristics were adopted and used in the development of this framework.…”

“…The operating environment is composed of at least two essential elements: the presence of laws and anticorruption mechanism (Yang, Hou, & Wang, 2013) which could be reduced to legal and institutional frameworks for regulating the operation of the PPP arrangements. The existence of enforceable laws provides assurance to private partners for safeguarding their interests and alleviating risk and at the same time help in curbing opportunistic behaviours in PPP.…”

“…Corruption imposes heavy transaction costs on private partners. Anticorruption measures include the improvement of openness, fairness, and transparency in the bidding process; the enforcement of the supervision of operation; and the strengthening of performance, evaluation, and auditing (Neshkova & Kostadinova, 2012in Yang, Hou, & Wang, 2013.…”