Transport is a key driver of economic and social development, bringing opportunities for the poor and enabling economies to be more competitive. Transport infrastructure connects people to jobs, education, and health services, and enables the supply of goods and services around the world. Modernizing ports, airports, roads, railroads and urban transportation systems is essential to development. Incomplete and inadequate transportation infrastructure can mean the difference between sustainable progress and persistent under-development.
The need for access to large amounts of land and space to build transportation facilities makes them expensive, long-term and politically sensitive undertakings. As a result, many transport projects require significant government support. However, experience has shown that private capital, expertise, and commercial discipline can make a measurable difference in the delivery of critical transport services.
Unlike other sectors, there is in fact a long tradition of private investment in transportation projects, with many examples of railways, tunnels and bridges financed by a combination of private and public funding. The early days of railways in countries like the United States and United Kingdom involved private companies building railway networks on land provided by the public sector. Bridges and tunnels have seen a similar combination of public and private involvement, benefiting from a toll from those wishing to use them. Airports and roads, while historically financed with public funds, have seen more private sector involvement over the last 20 to 30 years.
As governments continue to confront the mounting expense and poor efficiency track records of publically funded, highly subsidized transport operations, they are increasingly looking to the private sector for input in the development of new transportation schemes and investment into existing systems. In developing countries, where governments are seeking to rapidly increase transportation capacity, the costs are prohibitive and a private sector partner is an increasingly attractive option to share the expense and risks.
Well-structured public-private partnerships (PPPs) are one approach that can, under the right circumstances, help governments in developing and non-OECD countries meet their critical transport challenges. According to the Private Participation in Infrastructure Database, since 1990, there have been over 1,600 transport PPPs around the globe, which account for over $470 billion in private investment commitments in developing countries.