The latest infrastructure research

Several new World Bank papers have been published in the last few weeks regarding private participation in infrastructure - for those that are interested:

• The handshake: why do governments and firms sign private sector participation deals? Evidence from the water and sanitation sector in developing countries: The authors find that rule of law and the control of corruption are significant, albeit at a lower level, while the quality of contract law and political stability are not.
• Infrastructure and public utilities privatization in developing countries: Analyzes government tradeoffs between fiscal benefits and consumer surplus in privatization reforms of noncompetitive industries in developing countries.
• The impact of privatization on the performance of the infrastructure sector - the case of electricity distribution in Latin American countries: The authors suggest that changes in ownership generate significant improvements in labor productivity, efficiency, and product and service quality, and that most of those changes occur in the transition period. Improvements in the post transition period-beyond two years after the change in ownership-are much more modest.

• Is cost recovery a feasible objective for water and electricity? The Latin American experience: Given the relatively small segment of the population that faces genuine affordability problems in Latin America, the authors conclude there appears to be a promising case for using targeted subsidies to reconcile the cost recovery objective with social protection concerns.
• The role of developing country firms in infrastructure - a new class of investors emerges: Developing country investors have emerged as a major source of investment finance for infrastructure projects - this suggests a need to rethink the criteria used in selecting investors in schemes for private participation, which have been biased toward large international operators.
• Reform, private capital needed to develop infrastructure in Africa: To begin solving Africa’s infrastructure investment problems broad institutional reform is needed along with greater financial commitments by governments and donors.