As a result a number of governments turned to some form of “privatization” of infrastructure services. Chile and the UK paved the way in the 1980s. Technology advances in telecommunications made that sub‐sector particularly attractive for the introduction of competition and concomitant privatization.

# **Geographical patterns today**

From the 1990s onwards we have more systematic data on PPP developments in developing economies from the World Bank’s PPI database.<sup>12</sup> By February 2015 it covered 6146 projects in low and middle‐income countries with a total investment volume of about $ 2.2 trillion (not adjusted for inflation). Data on public sector infrastructure projects are, however, still not systematically available. In the following estimates by McKinsey on overall infrastructure investment levels by region are used to put PPP developments in perspective.<sup>13</sup> The general picture is one of waves of enthusiasm for PPPs followed by some disenchantment and consolidation. Different countries were caught up in the waves at different times. The World Bank’s World Development Report of 1994 estimated that PPPs accounted for some 7% of infrastructure investment in developing economies in the early 1990s, probably an underestimate by up to half in retrospect. It surmised that the total might double in the following years.<sup>14</sup> Indeed, it exploded. In 1997 $ 150 billion of PPP investments may have accounted for close to half of all infrastructure investment.<sup>15</sup> A collapse followed. By 2002 PPP investments fell back to barely $ 60 billion. Since then total investment has recovered reaching $ 200 billion in 2010 before subsiding somewhat.<sup>16</sup> At the same time GDP had grown rapidly. Today, PPPs account for something like 20% of total infrastructure investment in low and middle‐income economies, roughly double the level in the late 1980s.

PPPs rarely account for more than half of the infrastructure investments of a country. It is fairly normal for a country to use PPPs for 15 – 25% of total infrastructure investments. Most countries use PPPs at least occasionally; even for example,

> 12 In 1993 I created the PPI (private participation in infrastructure) database at the World Bank, which remains the main source on developments in infrastructure PPPs. www.ppi.worldbank.org  The data cover both new investment as well as purchases of existing companies.

13 McKinsey Global Institute (2013) “Infrastructure Productivity: How to save $1 trillion a year”, Washington D.C.

14 World Bank (1994) “Infrastructure for Development”, Washington D.C. p.93 15 GDP of low and middle‐income economies amounted to $6.4 trillion in 1997 (World Bank (1998/99) “Global Economic Prospects”, Washington D.C.). Assuming a total investment in infrastructure of 5% of GDP, $ 150 billion invested in PPPs amounted to almost half of that. Some of this was investment in existing companies. Net new investment still probably exceeded $120 billion and investment levels in emerging market were probably lower than 5% of GDP due to financial crises.

16 This assumes an average total investment level of about 4% of GDP, which is high for most countries except China (8.5%) and to a lesser extent India (4.7%).

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