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PPPs

The end of a long era

Branko Milanovic's picture

Is China, after a hiatus of 150 years, again the largest economy in the world? Not all sources of GDP data agree, but there is little doubt that China is either already now the largest economy, or it will, within a year, become so by overtaking that of the United States. Whichever the case may be, a long era when the American economy was the largest in the world and which began around 1860, is now reaching its end.

Data on gross domestic product (called now Gross Domestic Income) are available from three sources: the Maddison project, which is the only source for the long-run series of national GDPs, going back to 1820s; the World Bank or IMF annual data, going back to 1960; and Penn World Tables, produced periodically at the University of Pennsylvania, going back from their just-released version 8.0 to 1950 . All three sources produce GDP data in PPP (purchasing power parity) terms, which means that they adjust for differences in price levels between the countries. The easiest way to explain it is to say that PPPs try to account for each good and service using the same price for it around the world, so that a mobile phone, a kilo of rice and a haircut would each be valued the same in China as in the United States. Only thus can the real sizes of the economies, and the welfare of people, be truly comparable. These PPP data, in turn, are obtained through a massive worldwide project called the International Comparison Program, which is run every five to 10 years and collects more than 1,000 prices in all countries.

Fixing Fraud in Public-Private Projects

Leonard McCarthy's picture

Available in 中文

What’s a cash-tight government to do when it wants to modernize a hospital, build a railway, or expand the power grid to reach underserved areas? It might explore outside, private sources of financing—that’s where public-private partnerships (PPPs) come in.   The acronym has a promising ring to it, yet going back to the 1970s, its impact has been mixed.  At their best, PPPs can provide rapid injections of cash from private financiers, delivery of quality services, and overall cost-effectiveness the public sector can’t achieve on its own.

But at their worst, PPPs can also drive up costs, under-deliver services, harm the public interest, and introduce new opportunities for fraud, collusion, and corruption.  Our experience at the World Bank Integrity Vice Presidency is that because PPPs most often are geared toward providing essential public services in infrastructure, health and education, the integrity risks inherent in these sectors also transfer to PPPs.

On April 17, the Integrity Vice Presidency convened a public discussion on corruption in PPPs (pdf) bringing together finance, energy, and fairness-monitoring perspectives.  Looking at the landscape, in the last eight years, 134 developing countries have implemented PPPs in infrastructure, and in the last decade the World Bank has approved some $23 billion lending and risk guarantee operations in support of PPPs.

Could Kyiv use a few PPPs?

David Lawrence's picture

Public-private partnerships (PPPs)—agreements between governments and the private sector to finance infrastructure or public services—haven’t taken off in Ukraine, at least not yet. From time to time you hear about a PPP conference or workshop, and USAID is funding a new initiative to promote them. Can PPPs make bad infrastructure ande useless heaters obsolete?There is a concessions law (from 1999) and a newer concessions law for roads (2008). But the overall business environment isn’t very good (152 out of 183 economies in Doing Business) and there are issues with corruption (also an unlucky 152 in Transparency International’s Corruption Perception Index).

Iraq: Meaningful Reconstruction and Development

Louis Bedoucha's picture

I recently represented MIGA in a special working group of the OECD focused on Iraqi reconstruction.  It was an interesting and useful gathering, attended by Iraqi civil servants from across the administration, export credit agencies, and of course private sector representatives interested in doing business in the country.