Advertisement

Determinants of PPP in infrastructure investments in MENA countries: a focus on energy

  • Giuseppe Di Liddo
  • Alessandro RubinoEmail author
  • Ernesto Somma
Article
  • 19 Downloads

Abstract

Good infrastructures are key to guarantee sustained economic growth and inclusive development. However, fiscal and budget constraints are likely to restraint public investment in infrastructure. For these reasons, public–private partnerships (PPPs) are increasingly playing a crucial role in infrastructures deployment at global level. However, the factors affecting PPP attraction are still understudied. In particular, it is notable that some regions are persistently underperforming in terms of PPP investments. This study aims to identify the impact that non-financial factors, such as governance and regulatory quality, play in PPP investments in the MENA region. We analysed the impact of regulatory quality in infrastructure investment and we show that regulatory quality is the most relevant governance indicator to explain the level of PPP investments. Its impact is particularly strong in the energy sector, and in politically instable environments such as the MENA countries.

Keywords

Public–private partnership Energy Institutional quality Regulation 

JEL Classification

O47 P48 H11 H57 L24 

Notes

Compliance with ethical standards

Conflict of interest

On behalf of all authors, the corresponding author states that there is no conflict of interest. Alessandro Rubino

References

  1. Alfaro, L., Kalemli-Ozcan, S., & Volosovych, V. (2008). Why does not capital flow from rich to poor countries? An empirical investigation. The Review of Economics & Statistics, 80(2), 354–361.Google Scholar
  2. Aliouche, E. H., & Schlentrich, U. A. (2011). Towards a strategic model of global franchise expansion. Journal of Retailing, 87(3), 345–365.CrossRefGoogle Scholar
  3. Allen and Overy. (2009). Global infrastructure development and delivery—The stimulus for debate, allen & overy global survey. London: Allen and Overy LLP.Google Scholar
  4. Alloisio, I., & Carraro, C. (2015). Public-private partnerships for energy infrastructure: A focus on the MENA region. In S. Caselli, G. Corbetta, & V. Vecchi (Eds.), Public private partnerships for infrastructure and business development. New York: Palgrave Macmillan.Google Scholar
  5. Andon, P. (2012). Accounting-related research in PPPs/PFIs: Present contributions and future opportunities. Accounting Auditing & Accountability Journal, 25(5), 876–924.CrossRefGoogle Scholar
  6. Arezki, R. & Ferid, B. (2019). Developing public-private partnership initiatives in the middle east and North Africa: From public debt to maximizing finance for development. Policy Research Working Paper Series 8863, The World Bank.Google Scholar
  7. Arnold, J. M., Mattoo, A., & Narciso, G. (2008). Services inputs and firm productivity in sub-Saharan Africa: Evidence from firm-level data. Journal of African Economies, 17, 578–599.CrossRefGoogle Scholar
  8. Babatunde, S. O., Perera, S., Zhou, L., & Udeaja, C. (2015). Barriers to public private partnership projects in developing countries. Engineering, Construction and Architectural Management, 22(6), 669–769.CrossRefGoogle Scholar
  9. Begley, T. M., Khatri, N., & Tsang, E. (2010). Networks and cronyism: A social exchange analysis. Asia Pacific Journal of Management, 27(2), 281–297.CrossRefGoogle Scholar
  10. Bhattacharya, A., Romani, M. & Stern, N. (2012). Infrastructure for development: Meeting the Challenge. Centre for Climate Change Economics and Policy—Grantham Research Institute on Climate Change and the Environment—Policy paper, June 2012.Google Scholar
  11. Bovaird, T. (2010). A brief intellectual history of the public-private partnership movement. In G. Hodge, C. Greve, & A. Boardman (Eds.), International handbook on public-private partnerships (pp. 17–42). Northampton: Edward Elgar.Google Scholar
  12. Calderón, C., Moral-Benito, E., & Servén, L. (2014). Is infrastructure capital productive? A dynamic heterogeneous approach. Journal of Applied Econometrics, 30(2), 177–198.CrossRefGoogle Scholar
  13. Calderón, C., & Servén, L. (2010a). Infrastructure and economic development in sub-Saharan Africa. Journal of African Economies, 19(Issue suppl_1), i13–i87.CrossRefGoogle Scholar
  14. Calderón, C. & Servén, L. (2010b). Infrastructure in Latin America. Policy Research Working Paper 5317, World Bank, Washington, DC.Google Scholar
  15. Cambini, C., & Rubino, A. (2016). EU pressures and institutions for future Mediterranean energy markets: Evidence from a perception survey. In A. Rubino, M. T. Costa Campi, V. Lenzi, & I. Ozturk (Eds.), Regulation and investments in energy markets: Solutions for the mediterranean (pp. 133–153). New York: Academic Press.CrossRefGoogle Scholar
  16. Chen, Z., Daito, N., & Gifford, J. L. (2015). Data review of transportation infrastructure public–private partnership: A meta-analysis. Transport Review, 36(1), 1–23.Google Scholar
  17. Cook, P. (2011). Infrastructure, rural electrification and development. Energy for Sustainable Development, 15(3), 304–313.CrossRefGoogle Scholar
  18. Coviello, D., Moretti, L., Spagnolo, G., & Valbonesi, P. (2017). Court efficiency and procurement performance. Scandinavian Journal of Economics, 120(3), 826–858.CrossRefGoogle Scholar
  19. Cui, C., Liu, Y., Hope, A., & Wang, J. (2018). Review of studies on the public–private partnerships (PPP) for infrastructure projects. International Journal of Project Management, 36(5), 773–794.CrossRefGoogle Scholar
  20. De Castro, D., Neto, S., Oliveira Cruz, C., Rodrigues, F., & Silva, P. (2016). Bibliometric analysis of PPP and PFI literature: Overview of 25 Years of research. Journal of Construction Engineering & Management., 142, 10.Google Scholar
  21. Djankov, S., McLeish, C., Nenova, T. & Shleifer, A. (2010). Who owns the media?. NBER Working Paper No. 8288.Google Scholar
  22. Eberhard, A., & Gratwick, K. N. (2011). IPPs in Sub-Saharan Africa: Determinants of success. Energy policy, 39(9), 5541–5549.CrossRefGoogle Scholar
  23. Egger, P., & Raff, H. (2015). Tax rate and tax base competition for foreign direct investment. International Tax and Public Finance, 22, 777–810.CrossRefGoogle Scholar
  24. Estache, A. (2006). Infrastructure: A survey of recent and upcoming issues. Washington, DC: World Bank.Google Scholar
  25. Estache, A. (2016). Institutions for infrastructure in developing countries: What we know and the lot we still need to know. Working Papers ECARES 2016-27, ULB—Universite Libre de Bruxelles.Google Scholar
  26. Fay, M., Toman, M., Benitez, M., & Csordas, S. (2011). Infrastructure and sustainable development. In S. Fardoust, K. Yongbeom, & C. P. Sepúlveda (Eds.), Postcrisis growth and development: A development agenda for the G-20. Washington, DC: World Bank.Google Scholar
  27. Galilea, P., & Medda, F. (2010). Does the political and economic context influence the success of a transport project? An analysis of transport public–private partnerships. Research in Transportation Economics, 30(1), 102–109.CrossRefGoogle Scholar
  28. Gassner, K., Popov, A., & Pushak, N. (2009). Does private sector participation improve performance in electricity and water distribution?. Washington, DC: World Bank Publications.Google Scholar
  29. Gordon, C. (2012). The challenges of transport PPPs in low-income developing countries: A case study of Bangladesh. Transportation Research Board Annual Meeting, 24, 296–301.Google Scholar
  30. Gurara, D., Klyuev, V., Mwase, N. & Presbitero, A.F. (2018). Trends and challenges in infrastructure investment in developing countries. International Development Policy | Revue internationale de politique de développement.  https://doi.org/10.4000/poldev.2802.
  31. Hammami, M., Ruhashyankiko, J. F., & Yehoue, E. B. (2006). Determinants of public-private partnerships in infrastructure. Washington, DC: International Monetary Fund, IMF Institute.Google Scholar
  32. Iossa, E., & Martimort, D. (2016). Corruption in PPPs, incentives and contract incompleteness. International Journal of Industrial Organization, 44, 85–100.CrossRefGoogle Scholar
  33. Iossa, E., & Saussier, S. (2018). Public private partnerships in europe for building and managing public infrastructures: An economic perspective. Annals of Public and Cooperative Economics, 89, 25–48.CrossRefGoogle Scholar
  34. Kandil, M. (2009). Determinants of institutional quality and their impact on economic growth in the MENA region. International Journal of Development Issues, 8, 134–167.CrossRefGoogle Scholar
  35. Ke, Y., Wang, S., Chan, A. P. C., & Cheung, E. (2009). Research trend of public-private partnership in construction journals. Journal of Construction Engineering Management, 135(10), 1076–1086.CrossRefGoogle Scholar
  36. Kwofie, T. E., Afram, S., & Botchway, E. (2015). A critical success model for PPP public housing delivery in Ghana. Built Environment Project and Asset Management, 6(1), 58–73.CrossRefGoogle Scholar
  37. Levy, B., & Spiller, T. (1994). The institutional foundations of regulatory commitment: A comparative analysis of telecommunications regulation. Journal of Law Economics and Organization, 10(2), 201–246.Google Scholar
  38. Levy, B., & Spiller, T. (1996). Regulations, institutions, and commitment: Comparative studies of telecommunication. Cambridge: Cambridge University Press.CrossRefGoogle Scholar
  39. Marsilio, M., Cappellaro, G., & Cuccurullo, C. (2011). The intellectual structure of research into PPPs. Public Management Review, 13(6), 763–782.CrossRefGoogle Scholar
  40. Mckibbin, W., & Henckel, T. (2017). The Economics of Infrastructure in a Globalized World: Issues, Lessons and Future Challenges. Journal of Infrastructure, Policy and Development, 1, 254–272.CrossRefGoogle Scholar
  41. Med-TSO. (2013). Master plan of the Mediterranean interconnections and related investments. Rome: Med-TSO.Google Scholar
  42. Mota, J., & Moreira, A. (2015). The importance of non-financial determinants on public-private partnerships in Europe. International Journal of Project Management., 33, 1563–1575.CrossRefGoogle Scholar
  43. North, D. C. (1990). Institutions, institutional change and economic performance. Cambridge: Cambridge University Press.CrossRefGoogle Scholar
  44. OECD. (2014). Private financing and government support to promote long-term investments in infrastructure. Paris: OECD.Google Scholar
  45. OME. (2015). Mediterranean energy perspective. Paris: OME—Observatoire Mediterranéèn de l’Energie.Google Scholar
  46. Pongsiri, N. (2002). Regulation and public-private partnerships. The International Journal of Public Sector Management, 15(6), 487–495.CrossRefGoogle Scholar
  47. Reynaers, A. M., & Graaf, G. D. (2014). Public values in public-private partnerships. International Journal of Public Administration, 37(2), 120–128.CrossRefGoogle Scholar
  48. Rodrik, D., Subramanian, A., & Trebbi, F. (2004). Institutions rule: The primacy of institutions over geography and integration in economic development. Journal of Economic Growth, 9, 131–165.CrossRefGoogle Scholar
  49. Rud, J. P. (2012). Infrastructure regulation and reallocations within industry: Theory and evidence from Indian firms. Journal of Development Economics, 99, 116–127.CrossRefGoogle Scholar
  50. Saha, D., Hong, S.H. & Nair, T. (2019). Private participation in infrastructure—annual report 2018. The World Bank Group.Google Scholar
  51. Somma, E., & Rubino, A. (2016). Public-private participation in energy infrastructure in Middle East and North African countries: The role of institutions for renewable energy sources diffusion. International Journal of Energy Economics and Policy, 6(3), 621–629.Google Scholar
  52. Sovacool, B. K. (2013). Expanding renewable energy access with pro-poor public private partnerships in the developing world. Energy Strategy Reviews, 1(3), 181–192.CrossRefGoogle Scholar
  53. Straub, S. (2008). Infrastructure and growth in developing countries: Recent advances and research challenges. World Bank Policy Research Working Paper No 4460.Google Scholar
  54. Sy, A.N.R. & Sow, M. (2017). Does good governance matter more for energy investment? Evidence from sub-Saharan Africa. AERC discussion paper. African Economic Research ConsortiumGoogle Scholar
  55. Themistocleous, G., & Wearne, S. H. (2000). Project management topic coverage in journals. International Journal of Project Management, 18(1), 7–11.CrossRefGoogle Scholar
  56. Willoughby, C. (2013). How much can public private partnership really do for urban transport in developing countries? Research in Transportation Economics, 40(1), 34–55.CrossRefGoogle Scholar
  57. World Bank. (2004). World Development Report 2005: A better investment climate for everyone—overview. Washington, DC: World Bank.CrossRefGoogle Scholar
  58. Zhang, X. (2005). Paving the way for public–private partnerships in infrastructure development. Journal of Construction Engineering and Management, 131(1), 71–80.CrossRefGoogle Scholar

Copyright information

© Associazione Amici di Economia e Politica Industriale 2019

Authors and Affiliations

  1. 1.Department of EconomicsManagement and Business Law at Bari UniversityBariItaly
  2. 2.Ionian Department of Law, Economics and EnvironmentUniversity of Bari Aldo MoroTarantoItaly

Personalised recommendations