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Private Sector Participation in Infrastructure Investment
| Content Provider | Semantic Scholar |
|---|---|
| Author | Findlay, Christopher C. |
| Copyright Year | 2005 |
| Abstract | rivate participation in the provision of infrastructure is less than was once expected, particularly in developing countries. Some reasons for this are identified in this paper. It is argued that the problem of dealing with market power in the provision of infrastructure services is similar to that of other forms of procurement in the presence of long-lived and immobile assets employed specifically to produce an item or service. From this perspective, comments are offered on the inhibitors to private participation and on features of contract design that might limit impediments to private investment in this sector. P The financing required for infrastructure services in East Asia and the Pacific over the next five years was recently estimated at over US$300 billion, with the bulk of this needed in China (see van der Linden, 2004). The figure will now be even larger following the 2004 Boxing Day Tsunami. The construction of new assets and the renewal of existing assets are both required. With private sector support, these tasks could be met more efficiently. Yet flows of private investment into the infrastructure sectors of developing countries peaked in 1997 and have declined ever since — the turning point explained in part by the Asian financial crisis (Harris, 2003). There has also been a high rate of renegotiation of contracts, suggesting that the structure of the arrangements has been an important contributor to the reconsideration by private investors of these types of projects. Harris (2003) refers to a ‘widespread pessimism’ about private infrastructure projects. Some of the issues in the provision of infrastructure services, including the risk of the abuse of market power and the value of separation around the key bottleneck element in the supply of infrastructure services, are reviewed in the next section. How the private sector might contract with the government is then examined and the case for a complementary relationship between regulatory institutions and the use of contracts is made. Options are presented for the operation of the regulatory process, with special attention to rules on price setting. The final section summarises some implications for designing policy on private sector participation in infrastructure, with particular attention to the situation in developing countries. |
| Starting Page | 57 |
| Ending Page | 69 |
| Page Count | 13 |
| File Format | PDF HTM / HTML |
| DOI | 10.22459/ag.12.01.2005.05 |
| Volume Number | 12 |
| Alternate Webpage(s) | https://openresearch-repository.anu.edu.au/bitstream/10440/876/1/Findlay_Private2005.pdf |
| Alternate Webpage(s) | https://doi.org/10.22459/ag.12.01.2005.05 |
| Language | English |
| Access Restriction | Open |
| Content Type | Text |
| Resource Type | Article |
