Hazard Analysis on Public–Private Partnership Projects in Developing Asia

30 Pages Posted: 22 Feb 2019

See all articles by Minsoo Lee

Minsoo Lee

Asian Development Bank

Xuehui Han

Asian Development Bank

Pilipinas Quising

Asian Development Bank - Economic Research

Mai Lin Villaruel

Asian Development Bank

Date Written: July 23, 2018

Abstract

Developing Asia’s infrastructure gap results from both inadequate public resources and a lack of effective channel to mobilize private resources toward desired outcomes. The public–private partnership (PPP) mechanism has evolved to fill the infrastructure gap. However, PPP projects are often at risk of becoming distressed or worst being terminated because of the long-term nature of contracts and the many different stakeholders involved. This paper applies survival time hazard analysis to estimate how project-related, macroeconomic, and institutional factors affect the hazard rate of the projects. Empirical results show that government’s provision of guarantees, involvement of multilateral development banks, and existence of a dedicated PPP unit are important for a project’s success. Privately initiated proposals should be regulated and undergo a competitive bidding to reduce the hazard rate of the project and the corresponding burden to government. Economic growth leads to successful project outcomes. Improved legal and institutional environment can ensure PPP success.

Keywords: infrastructures, investment policy, public–private partnership, survival analysis

JEL Classification: F21, H54, H81

Suggested Citation

Lee, Minsoo and Han, Xuehui and Quising, Pilipinas and Villaruel, Mai Lin, Hazard Analysis on Public–Private Partnership Projects in Developing Asia (July 23, 2018). Asian Development Bank Economics Working Paper Series No. 548 (July, 2018). Available at SSRN: https://ssrn.com/abstract=3339075 or http://dx.doi.org/10.2139/ssrn.3339075

Minsoo Lee (Contact Author)

Asian Development Bank ( email )

6 ADB Avenue, Mandaluyong City 1550
Metro Manila
Philippines

Xuehui Han

Asian Development Bank ( email )

6 ADB Avenue, Mandaluyong City 1550
Metro Manila
Philippines

Pilipinas Quising

Asian Development Bank - Economic Research ( email )

6 ADB Avenue, Mandaluyong City 1550
Metro Manila
Philippines

Mai Lin Villaruel

Asian Development Bank ( email )

6 ADB Avenue, Mandaluyong City 1550
Metro Manila
Philippines

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