International Handbook on Public–Private Partnerships. Graeme A. Hodge, CarstenGreve, and Anthony E. Boardman, eds. Cheltenham: Edward Elgar, 2010. 631 pp.$299.95 (hardcover).

Public–private partnerships (PPPs)—especially in the form of long-terminfrastructure contracts (LTICs)—have been a growth industry in manycountries since the early 1990s. In Europe, more than 1,000 such contractshave been adopted in the past 15 years at a capital value of almost €200billion. The present volume provides a comprehensive and readablesurvey of the history of PPPs, their theoretical foundations, and empiricalevidence of their benefits, costs, and risks. It will be valuable to studentsof public policy and public finance as well as practitioners, governmentofficials, and the growing PPP industry composed of contractors, consult-ing firms, and financial institutions. It complements a recent InternationalMonetary Fund (IMF) volume1 that focused on fiscal aspects of PPPs.

The book is divided into four parts, which cover, respectively, thefoundations and conceptual framework for PPPs, the main lenses throughwhich PPPs can be assessed (political, economic, legal, accounting, and soon), a review of international experience in implementing PPPs, and anassessment of critical issues for the future. Several chapters in the book—inaddition to the introductory and concluding chapters by the three editors—are particularly well done and should be considered essential reading forstudents of this topic. These include chapters on the historical developmentof PPPs (chapters 3 and 4), how to evaluate their performance (chapter 5)and economic worth (chapter 8), risk management (chapter 12), an assess-ment of the United Kingdom’s Private Finance Initiative (chapters 14 and24), and the experience of PPPs in developing countries (chapter 25).

There are several important messages that recur throughout the volume.First, the concept of a PPP is complex: it is a group of related ideas,processes, and transactions within a broad unifying framework. At least 15objectives of PPPs can be identified (87) and 20 varieties of contractualrelationship (190). The use of the word “partnership” is a misnomer inmany cases—influenced by politicians who wish to give the idea a softer,more inclusive appeal—and many PPPs do not function as partnerships atall (25). The notion of an LTIC used throughout the book—with the empha-sis on a formal business relationship between the government and theprivate sector—is a more accurate description.

Second, the evaluation of PPPs is extremely difficult in practice, bothbecause of the subject’s conceptual slipperiness and the large numberof disciplines involved—economics, accounting, law, political science,engineering, and so on—that need to be brought together and reconciled.Many important technical areas, such as developing a sound legal basisand modern accounting framework for PPPs, have not been fully resolved.Assessing the counterfactual to a PPP—the relative cost of public andprivate finance—is not a simple matter. Different reviewers often interpretthe same results differently (93). Evaluation has also proved difficult in

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practice because of the inherently political nature of the decision-makingprocess, which acts as a distorting lens.

The practical challenges of evaluating PPPs are well set out by Hodge inchapter 5. Hodge concludes that empirical tests of the value for money(VFM) of PPP projects are not conclusive: “The real VFM performanceof PPPs remains empirically open” (95). Some authors go further. Forexample, Hellowell concludes for the United Kingdom that there is “strongevidence that private finance has proved more expensive than publicfinance, even after an objective appraisal of the cost of risks transferred”(326). These inconclusive findings are disappointing following twodecades of experience and a litany of empirical reviews and audit reports.

Third, related to the mixed evaluation results, PPPs have proved popularfor many bad reasons as well as good. According to Boardman and Vining,many governments support PPPs because they postpone government cashoutlays, allow the cost of the projects to be placed “off budget,” improvegovernment net cash flow, reduce the transparency of government finances,transfer risks to the private sector, and reduce exposure to political risk. Inthe United Kingdom, “a main motive for encouraging public financeinitiatives was to reduce or minimize the budget deficit,” and in the UnitedStates, “to pay later (and sometimes considerably more)” (162–164).

Fourth, the risks associated with PPPs are many and difficult tomanage. These issues are described in an excellent chapter by Monteiro,which uses public choice theory as its point of departure. Infrastructureprojects are subject to problems of adverse selection and moral hazard, aswell as to uncertainly and subjectivity. Hopefully, a new internationalaccounting standard for PPPs will soon be adopted, but in the meantime,accounting rules are inadequate and (as in the case of Eurostat) can createperverse incentives. Estimates of costs and revenues are often biased.Transfer of risk to private sector partners is imperfect. Fiscal risks aresubstantial and arise at many stages in the PPP process—planning, con-struction, licensing, and operation. Monteiro observes that “PPP projectsare typically not subject to appropriation [through the budget], and publicdecision-makers will thus tend to regard them a zero-cost, jeopardizingthe efficient selection of projects” (279).

Fifth, PPPs have proved popular in a relatively small group of (mainly“Anglo-Saxon”) advanced countries—in particular, Australia, NorthAmerica, Ireland, and the United Kingdom. With a few exceptions (e.g.,Portugal), the take-up of PPPs in other European Union countries havebeen modest. In Scandinavia, for example, PPPs have proved quite diffi-cult to reconcile with the corporatist culture. In developing countries, theWorld Bank and other donors have actively promoted the PPP model as away meeting the infrastructure gap. Infrastructure requirements are esti-mated at about 7% of a developing country’s gross domestic product butactual infrastructure spending at only 3%. Pessoa notes that according to aWorld Bank database, “140 developing countries implemented at least4111 projects with private participation . . . between 1990 and 2007” (574).

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This is a worrying statistic given the substantial risks attached to PPPs: inmany developing countries, PPPs may offer new opportunities for cor-ruption and financial mismanagement without resolving basic develop-mental needs. The World Bank could revisit its policy on promoting PPPs,propose adequate safeguards against risk, and (with the IMF) exert pres-sure on countries to adopt improved accounting standards.

The book ends on a more optimistic note than is perhaps warranted bythe considerable volume of evidence presented. The editors advocatemore research, using multidisciplinary approaches and more rigorousanalysis, and more comparative studies of PPPs. New approaches todeveloping partnerships between the public and private sectors are alsorecommended. The reality may be that the high point of the PPP idea haspassed and interest among practitioners may now be waning. While PPPsmay continue to be used in some countries, they are unlikely to becomethe dominant form of delivering infrastructure projects even in countrieswith powerful advocates. The editors note the U.K. Treasury’s commentthat such projects constitute “a small, but important part of the govern-ment’s strategy to deliver high quality public services” (596). Moreover,pressure exerted by citizen’s groups to improve the transparency, account-ability, and VFM of PPPs is likely to cut the very cordon that makes thempopular with politicians.

The volume would have benefited from tighter editing: the main mes-sages could have been summarized more concisely and without so manyacademic nuances; there is some repetition (e.g., discussion of the defini-tion of a PPP occurs several times as does material on the UK experience)and an excess of descriptive material (especially in the case studies andempirical evidence reviewed in part III). But overall, the volume is atimely, comprehensive, and valuable addition to the literature, whichdeserves to be widely read.

RICHARD ALLEN, World Bank

Note

1. Gerd Schwartz, Ana Corbacho, and Katja Funke, eds. Public Investment andPublic–Private Partnerships: Addressing Infrastructure Challenges and ManagingFiscal Risks (New York: Palgrave Macmillan, 2008).

Comparative Studies and the Politics of Modern Medical Care. Theodore R. Marmor,Richard Freeman, and Kieke G. H. Okma, eds. New Haven, CT: Yale UniversityPress, 2009. 370 pp. $55.00 (paper).

Do countries learn from each other’s experience of health-care reform?Theodore Marmor, Richard Freeman, and Kieke Okma argue that theylargely do not, but through this excellent volume, the authors reflect on

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