Public-private partnership allows large-scale public projects such as roads, bridges or hospitals to be carried out with private funding.
These partnerships work well when private sector technology and innovation are combined with public sector incentives to deliver on time and on budget.
Risks for the private enterprise include cost overruns, technical defects and failure to meet quality standards, while for public partners the agreed usage fee may not be supported by demand, for example for a toll road or bridge.
Despite their advantages, public-private partnerships are often criticized for blurring the lines between legitimate public goals and private commercial activities, and for the perceived exploitation of society due to the fact that this can take place for selfish purposes and rent seeking.
Economic efficiency is when every scarce resource in the economy is used and distributed between producers and consumers in such a way as to provide the greatest economic return and benefit to consumers.
The “golden rule” of public spending is fiscal policy, which says that the government should increase borrowing only in order to invest in projects that will pay off in the future.
A member of the World Bank Group, the International Finance Corporation (IFC) provides financing for investment by private enterprises in developing countries.
Overlapping debt is when the debt issued to finance the activities of the government falls on several political jurisdictions, while the joint debt is distributed among them.