Effects of Multilateral Support on Infrastructure PPP Contract Cancellation

Abstract

This paper examines the relationship between multilateral support and contract cancellation in long-term infrastructure public-private partnerships. The analysis draws on a large data set and employs a multi-level econometric model to define propensity scores and matching estimators to compare rates of cancellation between projects with multilateral support and a comparison group of public private partnership projects without multilateral support.

The results suggest that multilateral support has a positive effect on the survival of long-term public-private partnership infrastructure contracts. Whereas observed the data suggest that multilateral support has no effect on cancellation rates, a quasi-experimental approach shows that the cancellation rate for projects with multilateral (6 percent) would have been about 48 percent higher without support from multilateral development organizations.

Keywords: public-private partnership, contract cancellation, multilateral support, multilevel modeling, propensity score matching

JEL Classification: H54, H76, R42, C21, C52, C55