In a previous blog, I used the metaphor of marriage to explore the dynamic of public-private partnerships (PPPs) as relationships created between two parties with often very different expectations and methods of communication.
Today, we explore PPP cancellations, the what and why— further stretching the marriage metaphor.
The worst reconciliation is better than the best divorce – Miguel De Cervantes Saavedra
The ICP blog series explores ideas and issues under the International Comparison Program umbrella – including innovations in price and data collection, discussions on purpose and methodology, as well the use of purchasing power parities in the growing world of development data. Authors from across the globe, whether ICP practitioners or researchers making use of ICP data, are encouraged to submit relevant blogs for consideration to [email protected].
A visitor to the World Bank’s atrium on May 23, 2018 would have seen a who’s who of eminent economists and statisticians congregating to celebrate the 50th anniversary of the International Comparison Program. Organized by the Global ICP Unit based in the World Bank in Washington, D.C, a large local, and virtual, audience gathered to hear the thoughts and reflections of major ICP players at the “50 Years of Measuring World Economies” event.
This blog is based on the report The Web of Transport Corridors in South Asia -- jointly produced with the Asian Development Bank, the United Kingdom’s Department for International Development, and the Japan International Cooperation Agency
One of the oldest, the Grand Trunk Road from the Mughal era still connects East and West and in the 17th century made Delhi, Kabul and Lahore wealthy cities with impressive civic buildings, monuments, and gardens.
In India alone—and likely bolstered by the successful completion of the Golden Quadrilateral (GQ) highway system—several transport proposals extending beyond India’s borders are now under consideration.
They include the International North-South Transport Corridor (INSTC), linking India, Iran and Russia, the Asia-Africa Growth Corridor, and the Bangladesh, China, India, and Myanmar (BCIM) economic corridor.
The hope is that these transport corridors will turn into growth engines and create large economic surpluses that can spread throughout the economy and society.
These two cities are the economic hubs of China and India respectively, two emerging global powers.
The distance between them, about 5,000 kilometers, is not much greater than the distance between New York and Los Angeles.
But instead of crossing a relatively empty continent, a corridor from Shanghai to Mumbai—via Kunming, Mandalay, Dhaka, and Kolkata—would go through some of the most densely populated and most dynamic areas in the world, stoking hopes of large economic spillovers along its alignment.
“Build and they will come” seems to be the logic underlying many massive transport investments around the world.
However, the reality is that not all these investments will generate the expected returns.
Worse, they can become wasteful white elephants—that is, transport infrastructure without much traffic—that would cost trillions of dollars at taxpayers’ expense.
First, countries need to change the mindset that transport corridors are mere engineering feats designed to move along vehicles and commodities.
Second, sound economic analysis of how corridors can help spur urbanization and create local jobs while minimizing the disruptions to the natural environment, is key to developing successful investment programs.
Specifically, it is vital to ensure that local populations whose lives are disrupted by new infrastructure can reap equally the benefits from better transport connectivity.
For instance, more educated and skilled people can migrate to obtain better jobs in growing urban areas that are benefiting from corridor connectivity, while unskilled workers may be left behind in depopulated rural areas with few economic prospects.
But while corridors can create both winners and losers, well-designed investment programs can alleviate potential adverse impacts and help local people share the benefits more widely.
In that vein, India’s Golden Quadrilateral, or GQ highway system, is a cautionary tale.
No doubt, this corridor had a positive impact.
Economic activity along the corridor increased and people, especially women, found better job opportunities beyond traditional farming.
But this success came at a cost as air pollution increased in the districts near the highway.
This is a major tradeoff and one that was documented before in Japan when levels of air pollution spiked during the development of its Pacific Ocean Belt several decades ago.
Another downside is that the economic benefits generated by the GQ highway were distributed unequally in neighboring communities.
A healthy Public-Private Partnership (PPP) has several defining features: strong competition, bankability with low financial costs, lower risk of renegotiations, secure value for money, and efficiency gains.
What does it take for countries to develop PPPs that can fit this description? Why is it that some countries such as India, Colombia, Turkey, and Egypt have been able to develop strong and successful PPP programs while others have not been able to award any projects under special-purpose PPP legislations?
Our experience with infrastructure PPPs across the globe suggests that three institutional pillars are needed to increase the probability of PPP success.
Photo: shplendid | Flickr Creative Commons
Talk of trade tariffs and heightened geopolitical tensions are dominating news headlines recently. As developed economies consider escalating protectionist policies, it’s easy to forget about the situation many emerging markets face.
As outlined in the World Bank’s Global Economic Prospects report released in June this year, protectionist policies would affect emerging market and developing economies (EMDEs) more severely than advanced economies. And this is at a time where increased investment and spending in EMDEs, including in infrastructure, is sorely needed.
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On June 27-28, 2018, the World Bank's "States of Disruption" Conference brought together thought leaders and practitioners across several thematic areas to explore the ideas shaping governance in the 21st century today.
Miranorte is a small town in the State of Tocantins, northern Brazil, well-known for its pineapple production. During the rainy season, the production cannot reach the markets due to the obstruction of the roads with the water flow. In many places, the roads lack bridges and culverts, jeopardizing both safety and accessibility.
In order to address these challenges, the World Bank’s Multisector Project in Tocantins (2012-2019), which includes a rural road component, decided to hear firsthand from the community about their priorities for development and inputs in the selection of roads that needed improvement. Aside from a practical and transparent approach, the consultations compensated for the lack of information required for conventional planning.
Tocantins, as many places in the world, doesn’t have any traffic data, information on road conditions, or even maps of the rural road network available. Although IT technologies are emerging and the importance of these data for management of road assets is evident, it is often time-consuming and costly to survey all the rural road network, especially in a state like Tocantins, which is larger than the United Kingdom.
Why digitize public procurement?
Many countries have an opportunity to digitally transform public procurement systems to achieve enhanced efficiency, accountability, transparency, and participation of small and medium enterprises (SMEs). Digitally transforming public procurement would also accelerate national development objectives, such as enhancing public service delivery, developing human capital and the private sector, and gender empowerment.
Photo: rawpixel.com | Pexels
If the potential of public-private partnerships (PPPs) is to be realized, joint working within the public sector and between the public and private sectors needs to be improved.
Experience across the world has consistently identified that organizations find it difficult to effectively work together both within and across sectors. Issues of organizational objectives and priorities, individual and organizational sovereignty, status, power, resources, and culture act as barriers. This too often means that the potential outputs and outcomes from PPPs are not maximized.
In 2010, by contrast, 15 percent of Nepalis were considered poor.
Without a doubt, Nepal has made progress.