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Institutional quality and private sector participation: theory and empirical findings

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  • Rahel Schomaker

    (Cologne Business School
    German Research Institute for Public Administration Speyer)

Abstract

Through several conduits, sound institutional quality is pivotal for economic development, as there is evidence that stable democratic institutions, rule of law and sound governance structures in the administration are highly conducive to promote growth. Therefore, a high institutional quality is not only the end point, but also the starting point of a more sustainable development. In this paper we provide some theoretical considerations as well as empirical evidence, based on several regression analyses, that the quality of institutions in a wider sense, and governance, which includes not only the level of “politics” itself, but also the administrative level, is relevant not only for the macro-level of development (i.e. the increase of the national welfare and foreign investment), but also on a micro-level: A stronger participation of private enterprises in public service provision and the introduction of public-private part¬nerships depends to a high degree on the institutional quality. This is even more relevant as the improvement of public services and of core infrastructures can be seen as crucial multipliers for future growth.

Suggested Citation

  • Rahel Schomaker, 2014. "Institutional quality and private sector participation: theory and empirical findings," European Journal of Government and Economics, Europa Grande, vol. 3(2), pages 104-118, December.
    • Handle: RePEc:egr:ejge00:v:3:i:2:p:104-118
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    File URL: http://www.ejge.org/index.php/ejge/article/download/57/47
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    References listed on IDEAS

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    1. Geoffrey M. Hodgson, 1998. "The Approach of Institutional Economics," Journal of Economic Literature, American Economic Association, vol. 36(1), pages 166-192, March.
    2. Oliver E. Williamson, 2000. "The New Institutional Economics: Taking Stock, Looking Ahead," Journal of Economic Literature, American Economic Association, vol. 38(3), pages 595-613, September.
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    Cited by:

    1. Minsoo Lee & Xuehui Han & Raymond Gaspar & Emmanuel Alano, 2018. "Deriving Macroeconomic Benefits from Public–Private Partnerships in Developing Asia," Working Papers id:12888, eSocialSciences.
    2. Jeffrey Kouton & Wilfried Sanogo & Nandi Djomgoue, 2023. "Risk allocation in energy infrastructure PPPs projects in selected African countries: does institutional quality, PPPs experience and income level make a difference?," Economic Change and Restructuring, Springer, vol. 56(1), pages 537-580, February.
    3. Rahel M. Schomaker, 2017. "Public-Private Governance Regimes in the Global Sphere," Public Organization Review, Springer, vol. 17(1), pages 121-138, March.
    4. Deng, Zhongqi & Song, Shunfeng & Chen, Yongjun, 2016. "Private participation in infrastructure project and its impact on the project cost," China Economic Review, Elsevier, vol. 39(C), pages 63-76.
    5. Lee, Minsoo & Han, Xuehui & Gaspar, Raymond & Alano, Emmanuel, 2018. "Deriving Macroeconomic Benefits from Public–Private Partnerships in Developing Asia," ADB Economics Working Paper Series 551, Asian Development Bank.
    6. Bogdan Dima & Oana-Ramona Lobonţ & Nicoleta-Claudia Moldovan, 2016. "Does the Quality of Public Policies and Institutions Matter for Entrepreneurial Activity? Evidences from the European Union’s Member States," Panoeconomicus, Savez ekonomista Vojvodine, Novi Sad, Serbia, vol. 63(4), pages 425-439, September.

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    More about this item

    Keywords

    good governance; institutional economics; private sector participationInstitutional quality; good governance; institutional economics; public-private partnerships; public goods;
    All these keywords.

    JEL classification:

    • D02 - Microeconomics - - General - - - Institutions: Design, Formation, Operations, and Impact
    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • L33 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Comparison of Public and Private Enterprise and Nonprofit Institutions; Privatization; Contracting Out

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