• In 2004, investment flows to infrastructure projects with private participation in developing countries grew for the first time since 2000 to reach $62 billion. However, the analysis shows that the growth was driven by the telecommunications sector which accounted for $45 billion. All developing regions, apart from Sub-Saharan Africa, experienced increased investment in telecommunications. Within the telecommunications sector, independent mobile operators attracted about 50% of sector investment.
• Proceeds2 from infrastructure privatization in developing countries grew in recent years, rising from 48% of the total in the 1990s to 55% in 2000-2002
• East Asia and the Pacific raised twice as much in privatization proceeds3 in 2000-2003 as in the 1990s ($66 billion from 420 transactions). The People's Republic of China (PRC) alone accounted for nearly 90% of the proceeds in the region in 2000-2003, compared with 50% in the 1990s. PRC's stock market offerings in telecommunications and energy made it the top revenue earner among all developing countries in 2000-2003.
• Greenfield projects accounted for 56% of total investment flows and 60% of projects in 2001-2004. These are the most common form of privatization/PPP across infrastructure sectors, except in water where concessions are still the preferred form. Greenfield projects are also the most common in developing regions-except in Europe and Central Asia, where divestitures are still preferred.
• Greenfield projects predominated in developing countries, particularly in lowest-income countries, based on data for 1990-1999. They constituted 65% of projects in low-income countries compared with 37% for developing countries, reflecting the low starting base of infrastructure in developing countries.
• After the global slowdown in PPPs in the late 1990s, preference for low-risk contracts increased. Management contracts became more common, increasing from 2% of projects in 1990-2000 to 7% in 2001-2004 (based on the World Bank's PPI Project Database). They grew in number in all regions and sectors, but most were for water projects. The share of lease contracts remained at 2% of projects in both periods.
• Fourteen lease contracts were implemented in 2001-2004. In contrast, divestitures and concessions declined as a share of both investment flows and projects. Most investment flows to divestitures in 2001-2004 went to projects that had reached financial closure in the 1990s. New divestitures were limited to East Asia and Europe and Central Asia by 2003-2004.
• Privatization/PPPs have reached nearly all developing countries, generating more than $400 billion in proceeds in 1990-2003. Activity peaked in 1997 then declined, but was reactivated in 2001. Proceeds are concentrated in a small group of countries. Five countries -Brazil, PRC, India, Poland, and Russian Federation-accounted for more than 40% of proceeds in 1990-2003.
• Infrastructure (telecommunications; electricity generation, transmission, and distribution; natural gas transmission and distribution; transport; and water) accounted for half of privatization4/PPP proceeds in developing countries in 1990-2003. These sectors were followed by the competitive sectors (manufacturing, services, tourism, and other firms), energy (production of oil and gas, other hydrocarbons, and petrochemicals), finance, and the primary sector (minerals and metals) in terms of revenue generated.
Table 1 summarizes the flow of investment to developing countries both by sector and by region.
This overview of trends focuses on quantifiable outcomes and may not fully represent the additional value of the many PPPs that focus on improved operations and efficiencies, yielding value in a different form than direct and immediate revenue and investment.