The spread of public-private partnerships: a political economy analysis

Amid a general trend to redefine and reform public services, public authorities around the globe have introduced and experimented with innovative ways of involving private actors in the provision of public infrastructure and services — often referred to as Public-Private Partnerships (PPPs).
Infrastructure-related PPPs are, usually, a contractual arrangement for a single undertaking to build and refurbish an asset where the public authority would mandate a single company to arrange the financing of the endeavour, to design and build the project, to be in charge of the maintenance and even, on some occasions, to manage the operation of public services related to the asset.
A number of European national and regional governments and the European Union institutions have showed great interest in PPPs as an alternative procurement method, whereas some governments have abstained from this trend entirely or only used PPPs sporadically. This thesis — operationalised by a mix of qualitative and quantitative methods — is an inquiry into what factors inform the decision of public authorities to engage with PPPs more frequently. It involves testing a number of specific hypotheses generated to explain differential national engagement with PPPs, notably: the efficiency and effectiveness of the state (expressed as the state of public finances and the performance of public services); and a number of institutional variables — with institutions understood in this context as the incentives and constraints imposed by the national political system and the dominant mode of capitalism.
This study reconfirms findings from the PPP literature on the conditions under which public authorities are more likely to have recourse to PPPs — i.e., authorities with less than optimally performing public services and/or experiencing budgetary constraints are expected to use PPPs more frequently. This thesis, however, also argues that other institutional factors are equally important for the likelihood of countries using this alternative procurement and financing method. On the one hand, the findings suggest that the ability of governments to introduce reforms — in the form of a favourable veto point structure in the political system and the government’s relative power vis-à-vis opposition parties — is a significant predictor for the numbers of established PPPs. On the other hand, the analysis shows the relevance of the economic system; the analysis reveals that the traditional mode of coordination in the national economy — i.e., either through contracts or non-market relations — has a greater influence on PPP uptake than commonly discussed in the literature.