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

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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.

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Fig. 1

Source: World Bank and PPIAF, PPI Project Database: http://ppi.worldbank.org—http://www.ppiaf.org

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Notes

  1. https://ppi.worldbank.org/methodology/ppi-methodology.

  2. Water and sewage, transport and ICT.

  3. According to Ke et al. (2009) and Themistocleous and Wearne’s (2000) categorisation of research topics, six potential research areas are proposed in Cui et al. (2018). (1) Financial package and PPP application, (2) economics viability and value for money, (3) risk management and success factor, (4) procurement and contract management, (5) performance management, and (6) governance and regulation.

  4. Data are available at https://ppi.worldbank.org/data.

  5. Data are available at https://info.worldbank.org/governance/wgi/#home.

  6. Data are actually available starting from 1996. However, the continue series of data is available only starting from 2002.

  7. The primary sources of data are: African Development Bank Country Policy and Institutional Assessments, Afrobarometer, Asian Development Bank Country Policy and Institutional Assessments, Business Enterprise Environment Survey, Bertelsmann Transformation Index, Freedom House Countries at the Crossroads, European Bank for Reconstruction and Development Transition Report, Economist Intelligence Unit Riskwire & Democracy Index, Freedom House, Gransparency International Global Corruption Barometer Survey, World Economic Forum Global Competitiveness Report, Global Integrity Index, Gallup World Poll Survey, Heritage Foundation Index of Economic Freedom, Cingranelli Richards Human Rights Database and Political Terror Scale, IFAD Rural Sector Performance Assessments, iJET Country Security Risk Ratings, Institutional Profiles Database, IREEP African Electoral Index, Latinobarometro, International Research and Exchanges Board Media Sustainability Index, International Budget Project Open Budget Index, World Bank Country Policy and Institutional Assessments, Political Economic Risk Consultancy Corruption in Asia, Political Risk Services International Country Risk Guide, Reporters Without Borders Press Freedom Index, US State Department Trafficking in People report, Vanderbilt University Americas Barometer, Varieties of Democracy Project, Institute for Management and Development World Competitiveness Yearbook, World Justice Project Rule of Law Index, Global Insight Business Conditions and Risk Indicators.

  8. http://www3.weforum.org/docs/GCR2018/GCI_4.0_2018_Dataset.xlsx.

  9. Examples of similar databases are the Ease of Doing Business Index (World Bank) and the Indices of Economic Freedom (Heritage Foundation and Wall Street Journal) which also look at factors affecting economic growth but not as many as the Global Competitiveness Report. In particular, detailed data on total tax rate on firm profits are not available in these data sources.

  10. Note that the dataset also include zero values for PPP in the energy sector. For this reason we decide to exclude observations including missing values in our regressions, since it means that there are no investments in such sector for the year considered.

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Authors and Affiliations

  1. Department of Economics, Management and Business Law at Bari University, Largo Abbazia Santa Scolastica 53, Bari, Italy

    Giuseppe Di Liddo & Ernesto Somma

  2. Ionian Department of Law, Economics and Environment, University of Bari Aldo Moro, via Lago Maggiore angolo via Ancona, 74121, Taranto, Italy

    Alessandro Rubino

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  1. Giuseppe Di Liddo
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Appendix

Appendix

Figure 1, Tables 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12 and 13.

Table 8 Coefficient point estimates
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Table 9 Coefficient point estimates
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Table 10 Coefficient point estimates
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Table 11 Coefficient point estimates
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Table 12 Coefficient point estimates
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Table 13 Coefficient point estimates
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Di Liddo, G., Rubino, A. & Somma, E. Determinants of PPP in infrastructure investments in MENA countries: a focus on energy. J. Ind. Bus. Econ. 46, 523–580 (2019). https://doi.org/10.1007/s40812-019-00129-7

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