Infrastructure Access and Quality

Table 2.2 suggests that, as well as increasing access to infrastructure, PPP projects provide incentives for the private partner to enhance the quality of infrastructure services-if, that is, contracts are properly drawn up. Coefficients of the variable of interest are found positive and significant across selected indicators of access to infrastructure services, including energy, telecommunication, water supply, and sanitation. Access to telecommunication, particularly mobile phones, shows higher coefficients than fixed-line telephone and broadband subscriptions. This is in line with the findings of a general trend of increasing telephone connections, and advances in information and communication technology because of private sector participation (John et al. 2015). Infrastructure PPPs are also helping to tackle developing Asia's rapid urbanization, which requires better access to essential infrastructure.

Table 2.2: PPPsand Infrastructure Access and Quality in Developing Asia

GDP = gross domestic product, PPP= public-private partnership.

Note: Standard errors are in parentheses.

*** p<0.01 ** p<0.05 * p<0.1

Source: Authors' estimates.

Table 2.3 shows the estimated effect of increasing PPP infrastructure investments in developing Asia. Increasing PPP investments as a percentage of GDP is associated with higher quality infrastructure services, reflecting the innovation and efficiency gains that partnering with the private sector can deliver. Consequently, improved access and quality, alongside public sector reforms to strengthen PPP processes, can deliver additional economic growth. Increasing PPP investments relative to GDP would, on average, result in higher real per capita GDP growth of 0.1 percentage point, keeping other factors constant.

Table 2.3: Effect of Increasing PPP Investments in Developing Asia

GDP = gross domestic product, PPP= public-private partnership.

Note: Marginal effect is estimated using the 2015 average PPP ratio; that is, 0.5% of GDP. Source: Authors' estimates.

The benefits of this growth can reach the poor through expanded wage employment and other livelihood opportunities. PPPs affect employment redistribution across industries and potentially create jobs not only during construction but over the long-term economic life of the infrastructure asset. PPP investments likely help income redistribution by moving agricultural labor into more productive and remunerative industries, as shown in Appendix A2.2. Labor movements from low-productivity and low-earning activities, such as agriculture, into high-productivity and high-earning sectors have been vital to development in Asia (McMillan, Rodrik, and Verduzco-Gallo 2014).