This paper highlights the private sector involvement in investments to ease national fiscal constraints and to enhance efficiency in the provision of key services. Given that public investment requirements far exceed available resources in most developing countries, channelling public resources wisely as well as leveraging the opportunities to utilize both national and international sources of private or institutional finance is necessary.

In this paper, section 1 describes some general trends in involving the private sector in public projects. And section 2 focuses on PPPs and asymmetric information. Finally, section 3 draws some policy conclusions.

This paper is part of the working paper series “Infrastructure Finance in the Developing World” and is a joint research effort by GGGI and the G-24, exploring the challenges and opportunities for scaling up infrastructure finance in emerging markets and developing countries.