Sustainable transport PPP infrastructure development in emerging and developing economies: What determines private sector financing?

Abstract

The years 2026 to 2035 have been dedicated by the UN to sustainable transport infrastructure development. Public-private partnerships are an integral component of this strategic vision. The study analyzed the determinants of transport PPP financing in EMDEs using a panel of 29 countries. Data were collected between 2010 and 2024. A RE effects model, complemented by an FE model, provided the econometric framework. The study concluded that a stable inflationary environment, availability of credit, and the quality of the governance environment are the important predictors of transport PPP finance in EMDEs. Policymakers should therefore seek to coordinate monetary and fiscal policies to create a stable inflationary environment that is attractive to private investors. In addition, EMDEs should deepen their local financial markets to foster capital mobilization for transport PPP projects. Development financial institutions can play a catalytic role by offering credit guarantees and blended finance instruments to alleviate perceived risks and encourage private investors to crowd in. To enrich our analysis, we use PCA to construct an EMDEs governance index. Future research can apply methodologies different from those used in this research to conduct an in-depth analysis of transport PPPs and credit markets, thereby enabling comparisons of the findings.