When New Public Management Fails: Infrastructure Public-Private Partnerships and Political Constraints in Developing and Transitional Economies

Abstract

Amidst calls for more scrutiny of the failure of infrastructure public-private partnerships (PPPs), uncertainty about how we can measure failure remains, and little systematic evidence illuminates its likelihood. Our mixed-methods design explores the notion of failure, and identifies the conditions under which it happens. The first phase of our research employs documentary analysis and semi-structured expert interviews and identifies project cancellation as capturing the most severe occurrences of failure. A second phase statistically analyzes a unique World Bank dataset capturing the provisions of over 4,000 infrastructure PPPs launched between 1990-2015 in 89 countries. We find robust evidence supporting the theoretical claim that PPPs are less likely to be cancelled in countries with more veto points in their political institutions to restrain politicians from intervening in policy implementation. Cancellation is a rare, but valid indicator of failure, and the importance of veto players clarifies how political risk operates in this context.

Keywords: public-private partnerships, infrastructure, veto players, development, political institutions

JEL Classification: H4, H5, O10