Public-private partnerships (PPP) enjoyed its resurgence in China recently. However, while the government has initiated more than 12,000 projects since 2012, the number of them that have reached deals were small. This study aims to examine the determinants of PPP adoption in China between 2012 and 2016. Based on the transaction cost theory, we develop a four-pillar framework that includes factors related to the government, the market, the operating environment, and project-level characteristics. Applying the framework to empirical models at the provincial level, we find that the one-year adoption rate is affected especially by factors about the government.
Bibliographical noteFunding Information:
We use several sources of data. Annual demographic and economic data at the provincial-level, including government expenditures, population, GDP, and the total amount of import and export goods, are derived from China Statistic Yearbooks during 2012–2016. Project-related information is from the MOF database. Data about fiscal transparency comes from the Assessments of Chinese Fiscal Transparency at Provincial Level 2012–2016 , produced by the Centre for Public Policy Research of Shanghai University of Finance and Economics. Several variables related to the market and PPP operating environment come from the Marketization Index of China’s Provinces: NERI Report 2016 , the latest version of a biannual report that measures the progresses in establishing the market economy in China in 2014. Since this report only has cross-sectional data for provinces during the study period, we treat variables that derived from the marketization index as time-invariant. 5.2.1.
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- PPP adoption
- Public-private partnership
- infrastructure finance