Review of Industrial Organization (2006) 29:3–26 © Springer 2006
PPI Partnerships vs. PPI Divorces in LDCs
The World Bank, 1818 H Street, NW, Washington, DC 20433
ECARES, Universite Libre de Bruxelles, Brussels, Belgium
Abstract. In the last 15 years, a variety of public private-partnerships in infrastructure
have been adopted throughout the developing and transition world. Because many of
these experiences are also turning sour, it seems important to separate facts from emo-
tions. The paper argues that the wide differences in interpretations of the facts can be
explained by differences in the assessment criteria used to assess the incremental effect of
reforms. It is also driven by the sectors, the regions and the actors on which the analysis
tends to focus.
Key words: infrastructure privatization, regulation.
Over thirty years have now gone by since Chile launched the ﬁrst modern
large-scale private participation in infrastructure (PPI) program in a devel-
oping country as part of a larger scale privatization policy. It took more
than another 15 years to see the experience replicated on a similar scale
in another country with Argentina’s infrastructure reforms launched in
1989 by the Menem administration. At about the same time, some of the
most economically aggressive East Asian countries started to rely on crea-
tive project ﬁnance for many of their large infrastructure projects. Within
20 years of Chile’s daring policy experience, it seemed that all developing
countries from the poorest countries of Africa to the richest countries of
East Asia were at least ﬂirting with the idea of PPI and often wed to it.
Between 1984 and 2004, PPI generated investment commitments of almost
After reaching a peak of US$85 billion in 1997, PPI commitments have
however steadily dropped and reached about US$41 billion in 2003 and
barely recovering to about US$45 billion in 2004.
This is a strong indi-
cation that many of the relationships have gone sour. In fact, as seen in
many experiences in Latin America, Eastern Europe, Asia or Africa, the
Author for correspondence: E-mail: firstname.lastname@example.org
The data is from the World Bank PPI database.