Determinants of Public-Private Partnerships in Infrastructure Provision: Evidence from Muslim Developing Countries

This paper investigates the determinants of private involvement in public infrastructure provision in Muslim developing countries. The issue is considered important due to the persistent gap between the demand for and supply of public infrastructure in most of the Muslim developing countries. In this regard, an important infrastructure provision scheme increasingly utilised by the developing nations is Public-Private Partnership (PPP). Nevertheless, the policy outcomes of this scheme are diverse. Hence, when such schemes are implemented in those countries, improvements in public infrastructure and higher achievements in development expected from the policy seem to be limited. Based on that perspective, this study employs advanced panel estimators to develop a cross-country analysis of private finance determinants in 48 Muslim developing countries for the period 2002-2011. The findings suggest that market conditions, institutional qualities and country risks are the most crucial factors determining the private involvement in infrastructure financing in the Muslim countries. It is hoped that the findings will encourage policy-makers in these countries to prioritise this agenda in their efforts to attract private investment in public infrastructure, which in turn will contribute to higher economic growth and better development in the Muslim region.