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Public, private, or both

Nicholas Lembo's picture

With the release of US Treasury Secretary Tim Geithner's latest plan to clear bad loans off the books of troubled banks in the US, the fact that the elaborate auction is essentially a public-private partnership has flown under the radar amidst celebrations and critiques.

Public-private partnerships (PPPs) are a relatively old tool of development work. PPPs are often implemented in developing countries for large-scale infrastructure projects, landscape or agricultural improvements, or any number of other "public goods" projects. Typically, governments will finance part or all of the project, while private firms will carry out the construction or operation of the project.


PPPs have many benefits. Joined with the private sector, projects often escape the inefficiency and corruption that plagues much government work. By providing such large amounts of capital or start-up money, which many private sectors lack, governments help to spur business in a (hopefully) transparent environment, enforcing regulations and helping to create the foundations of a healthy, complex business sector.

Not only do such connections often help increase aid effectiveness but they also help to transfer knowledge and technology in both the public and private sectors. For developing countries that need high-level technologies to combat difficult global problems - such as boosting agricultural production, combating global warming with clean energy, and building "smart," green infrastructure - PPPs offer the opportunity to engage proven, global firms in their efforts. It's much easier to entice competent private firms to play a role in development when they're given the opportunity to turn a profit - and that's just what PPPs do.

The transfer of such knowledge, especially when coupled with continuing education efforts, allows "hard" projects in infrastructure, manufacturing, and energy, to provide a model for "soft" initiatives aimed at improving the social realities of daily life in the developing world. Policymakers should take notice - governments don't have to help out the private sector only in a crisis. Improving schools, public health, and housing will all require the help, and knowledge, of businesses throughout the world.


Submitted by Pravin on
As Infrastructure is the key in growth of developing nations but at the other end if we look at the budget allocation, it is very less in countries like India' and in it we have big holes of corruption, to avoid it shall we have an software system applicable which will track the allocation of funds and how it get dissipated from starting to bottom of the system? I think it sound good , at starting software may cost big as it is heavy to implement and increases cost due to intelligent resources required to develop it, But it will create huge flexibility and track the corruption in long run.

Submitted by Binish on
I suspect majority of the world population still have some misconceptions about infrastructure development! In a lion share of the cases, construction corporations design some projects and implement them in the name of development. Environmental factors are not at all considered. Roads are surfaced with bitumen on a periodical basis ignoring the availability of rocky mountains or hills for the same. No research has been conducted about the alternatives for surfacing roads. Public transport systems are limited to a few conurbations while millions are trapped in traffic cloggings!