Is there a relationship between Corruption and Public-Private Partnerships?

Abstract: Despite the importance of infrastructure, a big funding gap can be seen in infrastructure procurement. Public-Private Partnerships (PPPs) were once seen as a solution, but years later the results are underwhelming. As the industry can be susceptible to corruption, concerns have emerged about PPPs. To confront these concerns, this study aims to investigate if there is a link between corruption and the usage of PPPs. To do this, a panel dataset of 147 lower-income countries was compiled with data from the Private Participation in Infrastructure database, the Worldwide Governance Indicators and the World Development Indicators. A Fixed Effects Poisson Model was then applied to the panel dataset for an empirical analysis of the data. The regressions showed that control of corruption has a positive effect on both the number of PPPs and Greenfield PPPs when there is multilateral support involved. This relationship was found to support the “sand the wheels” perspective, where corruption has a negative effect on the usage of PPPs.