Public Private Partnerships (PPPs) exploit the fact that both the public and private sectors have certain advantages relative to the other in the performance of specific tasks. By allowing each sector to do what it does best, public services and infrastructure can be provided in the most economically efficient manner. The major challenge state and local transportation officials were facing was the shortfall in financial resources to respond to increasing needs. The problem is worsening by competition for funds amid government and broad public resistance to tax increases. Private sector capital is welcome in these situations, sometimes without considering other consequences of the partnerships. Experiences from the transport and other sector show us, that unforeseen costs arising from re-negotiations may in some cases override the benefits of PPPs. In the following section, I demonstrate with Hungarian experiences that among the potential benefits a few were realised in major highway projects. In the second part, I present the possible economic advantages of PPPs. I believe, contract structure has great impact on the exploitation of the efficiency of private sector. That is why in the third section I address the question: To what degree can the government achieve efficiency in different contractual environments? Finally, section four concludes the paper. (Author/publisher)
Abstract