Author: Reinaldo Fioravanti

Publisher: Inter-American Development Bank

Published: 2019-05-07

Total Pages: 267

ISBN-13:

Investment in infrastructure is, admittedly, one of the main forms of economic development. Traditionally, the Public Administration implements infrastructure projects committing taxpayers’ money to finance them. For the past decades, demand for infrastructure has been growing steadily, but public funds for current and future needs are limited and the public finances of many governments have increasingly reached a point where long-term borrowing is not a ready option. In a recent study, GI Hub estimated the cumulative ‘global infrastructure need’ from 2015 to 2040, and the ‘investment gap’ for the period. US$ 94 trillion would be needed in investment and the gap is US$ 15 trillion . This has led the government to accept the growing importance of the private sector participation in the financing and management of infrastructure projects, so it began seeking alternative methods of procurement. One method whose applicability is increasing is the use of public-private partnerships (PPPs) to finance and/or manage infrastructure projects. In this regard, well-prepared infrastructure projects can generate high social rate of returns and improves well-being, whereas inadequate infrastructure represents a barrier to growth and improved quality of life and can lead to unsustainable financial burdens for the government, especially in developing countries. Although not all infrastructure is suitable to follow the PPP route, those policy-makers that choose to shift from public infrastructure financing to private partner have to consider the nature and motivations of long-term investors and the generation of value for money as well, that is, to align the interests of both the public and private sectors. With the participation of a private partner in well-prepared investment projects, there may be larger investments and the population’s life quality improvement. Also, PPPs are a way to introduce private sector technology and innovation into providing better public services through innovative planning and design’ and ‘efficient project management. Building and maintaining infrastructure are essential for economic expansion and social development, if delivered efficiently and effectively, it can translate into economic growth. However, the world is not spending enough on infrastructure to catch up with technological changes, urbanization and shifting demographics. The Inter-American Bank (IDB) and the Global Infrastructure Hub (GIH) decided to analyze and carry out a research on the legal framework for PPPs in Latin America and the Caribbean Region to establish guidelines on PPP law leading practices.