Lessons of the 1990s: back to PPP basics

Chapter 3 discusses refinements to the basic approach to PPPs which were made in the early 2000s by development institutions like the World Bank as part of an effort to understand the failures of structural adjustment. PPPs might have been discredited along with privatization, but as the development focus of the World Bank shifted from economic growth to poverty alleviation, the presumed ability of PPPs to improve service delivery of existing SOEs, including services for the poor, made them a useful tool in this new strategic approach. The faith in private sector-led growth and development that helped fuel structural adjustment in the 1980s and 1990s was still strong and widespread, and the use of PPPs was still consistent with that ideological orientation. But the World Bank in particular realized that more work was needed to ensure that PPPs were beneficial and sustainable. This led to a somewhat slower and more deliberative approach to PPPs, which recognized the importance of preparing the “upstream” project-enabling environment. This was a return to PPP basics that had been recommended during the 1990s although largely ignored due to the pressures to quickly implement lending programs and uncertainties about what exactly were “the basics.”