Being that it is rooted deeply in their history, private sector involvement in the activities of the public sector has a long-lasting tradition in European countries such as, France and the UK1. Throughout the decades of such involvement, the forms, spatial dissemination and public perceptions of PPPs have evolved a great deal. From the other side, the face of European society is also being reshaped, with its goals for development and principles being reconsidered.
Subsequently, the debate about private sector involvement has evolved from the local to the regional and European levels. Member states are introducing changes to legislation at each of these levels, while institutions supporting the promotion of PPPs are being established. At the same time, the European Commission, by issuing the Green Paper on Public Private Partnerships and Community Law on Public Contracts and Concessions (the 'PPP Green Paper')21 in 2004, is expecting to stimulate further public discussion on the topic.
Given the increased budget constraints being experienced by member states, as well as the drive to benefit from the know-how and the working methods of the private sector, the debate surrounding PPPs has increasing importance. There is, however, a realization at the regional level that PPPs could be limited in nature: that private sector involvement cannot be considered a miracle solution for a public sector facing budget constraints, even though there are certain micro-economic benefits.
While PPPs have become established as one of the policy tools available to governments, the state of PPP development varies widely between member states. This variation is due to the fact that PPPs are often complex and generally take longer to develop and implement than traditional projects. As PPPs are a relatively new means of procuring goods and services in most countries, public sector officials seldom have experience of implementing such projects and there is generally a poor level of understanding of PPPs.3
The present chapter provides a description of the existing legislative and institutional PPP framework in selected country members of the Organization of Economic Cooperation and Development (OECD), analyses the PPP Green Paper as part of the recent trend of PPP discussion and illustrates the different institutional models that can be found among OECD member states.
A special emphasis is placed on the European Union as a regional entity, and the status of PPP legislation and institutional frameworks within its member states (see Appendix 1).
After the 2004 enlargement, the European Union includes 25 member states, forming a market of around 425 million people; it aims to become the world's strongest economy by 2010.4 The budget of the European Community is, however, being constrained increasingly as social and economic disparities between its member states grow. Public services and infrastructure investment are among the most vulnerable areas; these areas are essential to the competitiveness of EU economies. Trans-European Transport Networks (TEN-T)5 and public services such as water and wastewater management, solid waste and energy operation are among the areas most in need of investment.
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1 Green papers are discussion papers published by the European Commission on specific policy areas. Primarily they are documents addressed to interested parties - organizations and individuals - who are invited to participate in a process of consultation and debate. In some cases, they provide an impetus for subsequent legislation. White papers are documents containing proposals for European Community act ion in a specific area. They sometimes follow a green paper published to launch a consultation process at the European level. While green papers set out a range of ideas presented for public discussion and debate, white papers contain an official set of pr oposals in specific policy areas and are used as vehicles for development of those proposals. (EU Documents Glossary).