Private Infrastructure Investment at the Subnational Level

Abstract

The volume of infrastructure under the jurisdiction of subnational governments is increasing in tandem with increases in decentralization and devolution of responsibilities to those governments. This has sparked interest in the private provision of infrastructure services. However, this move is fraught with challenges that arise partly from the social implications of the services that are in purview of each level of government and also because of the political, institutional, economic, and financial characteristics of subnational levels of government. This article discusses these challenges and presents some recommendations to overcome them. The best ally for accelerating this process will continue to be a well-structured contract with capable and responsible private operators, operating in a favorable environment, with transparency and disclosure, under a responsible local government with a long-term outlook.