Public-private partnerships (PPP) in infrastructure financing: A comparative study of developed and developing economies

Abstract

Public-private partnerships (PPPs) facilitate risk-sharing and asset financing to encourage private sector involvement in infrastructure development, particularly in developing countries facing growing infrastructure needs. This research compares PPP frameworks in developed and developing nations, focusing on risk management, financial structures, and sustainability practices. Developed countries benefit from stable legal systems, robust financial instruments, and effective risk-sharing mechanisms that attract private investment. In contrast, developing economies often struggle with weak regulations, market instability, and limited institutional capacity. Multilateral institutions like the World Bank, Asian Development Bank, and International Finance Corporation support PPPs by offering risk mitigation tools and sustainable financing. The study emphasizes that sustainability, through ESG assessments, green finance, and climate-resilient infrastructure, is crucial to long-term PPP success. Findings reveal that generic PPP models often fall short without tailored strategies. Effective partnerships require strong institutional frameworks, collaborative governance, and innovative financing. Ultimately, PPPs must adopt transparent, adaptable, and climate-responsive approaches to overcome regulatory, financial, and environmental challenges, positioning them as vital mechanisms for sustainable infrastructure development.