Determinants of the formation process in public-private partnership projects in developing countries: evidence from China

Public-private partnerships (PPPs) are expected to play a pivotal role in mobilising financial resources for infrastructure. However, the promotion of PPPs has faced challenges to their success in many countries. This study empirically analysed the determinants of initiation and adoption in PPP projects. It employed Tobit regression models with a Chinese provincial-level panel dataset from 2009 to 2019 for evaluating how government, market, and operating environment affect the number and investments in PPP projects. The results unveiled that local governments are motivated by fiscal pressure to initiate PPP projects. They also showed that the successful adoption of PPPs is associated with the activeness of private capital in local markets while neither PPP policy nor PPP fund at provincial level could facilitate the formation of PPPs. This study distinguished the initiation of PPP projects from their adoption, through which the truly key determinants of formatting PPPs were successfully identified.