Factors Influencing Private Participation in Public Infrastructure Projects: The South Asian Experience in the Global Context

Abstract

This paper takes a global look at the main reasons why both public and pri-vate entities wish to collaborate on infrastructure projects in the form of public-private partnerships. It uses a cross-country panel regression for five South Asian countries between 1997 and 2018. The study finds that PPPs tend to be more common in countries with higher GDP per capita and larger market size. The study suggests that countries with rising exchange rate and countries where governments suffer from heavy external debt burdens are less likely to have PPPs. Countries with substantial foreign exchange reserves and development aid, are found to be less eager to pursue PPPs. The study provides evidence of the importance of the rule of law and control of corruption. Finally, the financial crisis of 2007–2008 is not proved to have negative effect on PPP flows to South Asian countries, manifesting their strong resilience to financial crisis shocks.