Seeking to address inefficient and costly infrastructure delivery, governments over the past two decades have turned to public-private partnerships (PPPs) to build and operate infrastructure. The key characteristic of PPPs is the outsourcing and 'bundling' of project delivery components (for example, design, build, finance, operate), structured to incentivise the builder-operator to incorporate long-term operating cost considerations in the design and construction phases of a project and reduce coordination costs. This article reviews the benefits and drawbacks of PPPs and the experience to date, focusing in particular on developing economies. Relative to traditional procurement, PPPs are complex, and require governments to anticipate and plan for contingencies and conduct monitoring and enforcement of long-term contracts. We argue that institutional capacity is a key determinant of PPP success and in mitigating potentially welfare-reducing contract renegotiations evident in the Latin American experience.

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who describes systemic risk as "the probability that the financial system is unable to support economic activity": Mark Carney, cited in Nikil Chande, Nicholas Labelle, and Eric Tuer, Central Counterparties and Systemic Risk (Bank of Canada, Financial System Review, December 2001) at 1; Ben Bernanke, who advocates for a broad definition that includes "developments that threaten the stability of the financial system as a whole and consequently the broader economy":