As a widely adopted policy innovation, public-private partnership (PPP) has faced more and greater challenges in developing countries as compared to in developed countries. Aside from insufficient knowledge and skills of government, unsettled macroeconomic environment and less developed marketplace, uncertain political environment constitutes a fundamental obstacle inhibiting successful PPP development in developing countries. Here, political environment refers to political factors that are external to a public agency that administrates PPP projects and makes project-level decisions. Arguably, developing countries lack political institutions and legal rules that ensure the implementation and continuity of the partnership contracts between the government and private businesses. For this reason, when extending the research of PPP outside of developed industrial countries, we should pay particular attention to the relevance of political factors and investigate their influences on the success and failure of PPP projects in less certain environment.
Taking China as a critical case, we aim to explain how external political conditions affect a public agency to terminate PPP projects it administrates before the term of the partnership contracts ends. We propose a conceptual framework, in which the termination of PPP projects depends on three interconnected political forces: that from above, from below, and in between. The force from above refers to the constraints of the central government on PPP development; the force from below is public opposition against PPP; and the force in between refers to the unconstrained discretion of the regional government, where the public agency administrating PPP projects is located. In addition, we believe that another two conditions -- the pressure of regional development and project financial performance-- also have an impact on the fate of PPP projects in Chinese context.
We resort to a qualitative comparative analysis (QCA) to explore how the political conditions affect the early termination of PPP highway projects in China’s recent history. The increasingly popular QCA is appropriate for our study because we have a strong theoretical belief that various political factors, along with other factors, may conjointly take effect on PPP projects, and different combinations of factors may lead to the same outcome, such as termination, of those projects. Based on a QCA study of 30 historical cases of PPP highway projects in China, we find three causal pathways to the early termination of PPP projects. Collectively, they indicate that the constraint of China’s central government is a necessary condition of all three combinations of conditions that are sufficient to early termination of PPP projects, although it is an INUS condition. Regional government matters in a sense that unconstrained discretion of the regional government is an INUS condition for two of the three causal pathways. And organized public opposition can also cause the early termination of PPP projects if it is accompanied with forces from both the central and regional governments. These findings unveil some undernoted patterns of government-business relationship in China in particular and in developing countries in general.
Working with the private sector: externalisation, contracting, public-private partnerships
