The role of institutions in private participation in infrastructure revisited

Taguchi, Hiroyuki (2019): The role of institutions in private participation in infrastructure revisited.

Abstract

This paper aims to examine institutional effects on the private participation in infrastructure (PPI) projects during the recent period for 2002-2017 with 117 sample economies, by using the PPI and the Worldwide Governance Indicators database of the World Bank. The study contributes to enriching the evidence by updating the sample time-horizon and by widening the coverage of sample economies. The main findings of this study are summarized as follow: the institutional role in promoting the PPI projects are clearly identified in terms of government governance indicators such as government effectiveness, regulatory quality, rule of law and control of corruption; in particular, the control of corruption, which is the controversial issue in the previous studies, is confirmed to be one of the important factors to boost the PPI projects; and the macroeconomic stability is also a significant contributor for the PPI projects.

• Item Type: MPRA Paper
• Language: English
• Keywords: Private Participation in Infrastructure, Institution, Worldwide Governance Indicator, Control of Corruption, and Multicollinearity
• Subjects: H - Public Economics > H5 - National Government Expenditures and Related Policies > H54 - Infrastructures ; Other Public Investment and Capital Stock; K - Law and Economics > K2 - Regulation and Business Law > K20 - General; O - Economic Development, Innovation, Technological Change, and Growth > O4 - Economic Growth and Aggregate Productivity > O43 - Institutions and Growth

References

McKinsey Global Institute (2016) Bridging Global Infrastructure Gaps, McKinsey Global Institute: Washington, D.C.

Banerjee, S.G., J. M. Oetzel and R. Ranganathan (2006) “Private Provision of Infrastructure in Emerging Markets: Do Institutions Matter?” Development Policy Review 24(2), 175-202.

Bergara, M.E., W.J. Henisz and P.T. Spiller (1998) “Political Institutions and Electric Utility Investment: A Cross-Nation Analysis” California Management Review 40(2), 18-35.

Doh, J. and R. Ramamurti (2003) “Reassessing Risks in Developing Country Infrastructure” Long Range Planning 36(4), 337-53.

Flachaire, E., C. Garcia-Penalosa and M. Konte (2014) “Political versus Economic Institutions in the Growth Process” Journal of Comparative Economics 42(1), 212-229.

Hammami, M., J.F. Ruhashyankiko and E.B. Yehoue (2006) “Determinants of Public-Private Partnerships in Infrastructure” IMF Working Paper WP/06/99.

Lee, K. and B.Y. Kim (2009) “Both Institutions and Policies Matter but Differently for Different Income Groups of Countries: Determinants of Long-Run Economic Growth Revisited” World Development 37(3), 533-549.

North, D.N. (1990) Institutions, Institutional Change and Economic Performance, Cambridge University Press: New York.

Rodrik, D., A. Subramanian and F. Trebbi (2002) “Institutions Rule: The Primacy of Institutions over Geography and Integration in Economic Development” NBER Working Paper 9305.

Vaal, A. and W. Ebben (2011) “Institutions and the Relation between Corruption and Economic Growth” Review of Development Economics 15(1), 108-123.