Overall, the evidence suggests that PPPs have often tended to be more expensive than the alternative of public procurement while in a number of instances they have failed to deliver the envisaged gains in quality of service provision, including its efficiency, coverage and development impact. Their impact moreover varies across sectors. Most research findings indicate that PPPs are better suited for economic infrastructures such as transport and electricity, where better quality infrastructure can reduce cost at the operational stage and impact on the level of service and where demand is relatively stable and easy to forecast. They are however less likely to deliver efficiency gains in the social sector such as hospitals and schools, where service quality is mainly determined by human capital investment, and demand evolves quickly over time. For instance, Joseph (2014, p. 6) concludes that PPPs in the health sector, especially involving philanthropies and donors, can be characterized as "a double-edged sword. Although they are able to provide large amounts of money, they do not allow for a holistic view of the healthcare concerns faced by a country".
After a systematic review of a large body of literature on PPPs in developing countries, the Evaluation Department of the Government of the Netherlands, (2013), concluded that (i) the evidence base on PPP evaluations is still scarce and hardly relies on sound and robust empirical counterfactual analysis; (ii) reported effects of PPPs are rather positive at output level, but also weak, mixed and negative effects are registered in several occasions; and (iii) the evidence of some development outcomes and effectiveness is rather weak.
Thus, it is unsurprising that PPPs have yet to become a major catalyst of investment in key sectors for sustainable development. According to Hall (2015), even in countries which make most use of PPPs, such as UK and Australia, they only account for about 15 per cent of all infrastructure investments; for most OECD countries the proportion is less than 5 per cent and, within Europe, PPPs represent little more than 5 per cent of all infrastructure investment. Even in those sectors - such as economic infrastructure - where PPPs may be considered more viable, but where evidence suggests they have not always been an unqualified success, their efficacy is dependent upon a number of interrelated conditions that, as will be explained below, can be viewed as essential elements of a broader institutional framework for PPPs.
At this juncture, it would be useful to refer to two very insightful observations by Trebilcock and Rosenstock (2015, pp 342-343): (i) "The notion that PPPs effectively permit a government to build infrastructure where it would otherwise lack the fiscal capacity must be viewed cautiously as it may invoke fallacious reasoning. Where the government permits a project to be delivered by a private proponent, and the proponent earns a return by charging user fees, the state foregoes the future revenue stream. This delivery method thus comes with a cost. (ii) The suggestion that PPPs can circumvent government fiscal constraints may also be based on problematic accounting practices. PPP arrangements, where the state pays a private proponent to deliver the project over the life of the contract (rather than user fees), creates a long-term liability on the state…Clearly, masking government liabilities does not reduce them…, nor is it transparent ".