Measuring public-private partnership efficiency: A sectoral analysis of electricity and ports

This paper aims to measure the role of public-private partnership (PPP) investments in the ports and electricity sectors in shifting the efficient production frontier, as well as their role in determining inefficiency in the electricity sector, using stochastic frontier analysis and fixed-effects estimation. It also examines the effect of the governance framework in influencing the efficiency of PPPs. The results show a positive contribution of sectoral PPPs to the shift of the efficient frontier. However, the contribution of PPPs in the ports sector (3%) is greater than that in the electricity sector (1%). In the electricity sector, PPPs, along with the governance framework—proxied by credit to the private sector and CPIA criterion 5 (financial sector development) —help reduce inefficiency. In contrast, CPIA criterion 13 (quality of budgetary and financial management) is associated with increased inefficiency. In the port sector, trade openness, exchange rate, and CPIA criterion 3 (debt policy) reduce inefficiency, whereas CPIA criterion 1 (monetary policy) contributes to increase the inefficient frontier.