Choosing State Owned Enterprises over Public-Private Partnerships for Infrastructure Governance: Explaining Institutional Change with Evidence from Denmark’s Transport Sector

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Abstract

This paper shows why State Owned Enterprises (SOEs) are sometimes preferred over the more known Public-Private Partnerships (PPP) in infrastructure governance con-trary to the academic debate and policy focus the last two decades. The Danish case of transport infrastructure governance is examined focusing on the road and the rail net-work where a new modern SOE model is developed and used in mega projects. This paper uses theories of historical institutional change focusing on path dependency and the gradual change mechanisms of layering and conversion to analyze the institutional-ization of the SOE model and to argue how and why it excluded PPPs. The SOE model was chosen at a critical point in time when the PPP model was starting to grow in other countries. The SOE model combines a professional board and management with financ-ing via state guaranteed-loans and user charges. The SOE model was layered on the existing agency model for public provision of transport infrastructure and became locked-in for new mega-projects. Combined with a general lack of institutional support for PPPs and a strong national economy the PPP model in Danish transport infrastruc-ture governance was excluded. The paper contributes to the renewed academic interest in SOEs and the results are relevant to other countries coping with public-private mixes in infrastructure governance.
This paper shows why State Owned Enterprises (SOEs) are sometimes preferred over the more known Public-Private Partnerships (PPP) in infrastructure governance con-trary to the academic debate and policy focus the last two decades. The Danish case of transport infrastructure governance is examined focusing on the road and the rail net-work where a new modern SOE model is developed and used in mega projects. This paper uses theories of historical institutional change focusing on path dependency and the gradual change mechanisms of layering and conversion to analyze the institutional-ization of the SOE model and to argue how and why it excluded PPPs. The SOE model was chosen at a critical point in time when the PPP model was starting to grow in other countries. The SOE model combines a professional board and management with financ-ing via state guaranteed-loans and user charges. The SOE model was layered on the existing agency model for public provision of transport infrastructure and became locked-in for new mega-projects. Combined with a general lack of institutional support for PPPs and a strong national economy the PPP model in Danish transport infrastruc-ture governance was excluded. The paper contributes to the renewed academic interest in SOEs and the results are relevant to other countries coping with public-private mixes in infrastructure governance.
LanguageEnglish
JournalInternational Public Management Review
Volume18
Issue number2
Pages137-161
Number of pages24
ISSN1662-1387
StatePublished - 2018

Keywords

  • Public/private partnerships
  • Transport infrastructure
  • State owned enterprises

Cite this

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abstract = "This paper shows why State Owned Enterprises (SOEs) are sometimes preferred over the more known Public-Private Partnerships (PPP) in infrastructure governance con-trary to the academic debate and policy focus the last two decades. The Danish case of transport infrastructure governance is examined focusing on the road and the rail net-work where a new modern SOE model is developed and used in mega projects. This paper uses theories of historical institutional change focusing on path dependency and the gradual change mechanisms of layering and conversion to analyze the institutional-ization of the SOE model and to argue how and why it excluded PPPs. The SOE model was chosen at a critical point in time when the PPP model was starting to grow in other countries. The SOE model combines a professional board and management with financ-ing via state guaranteed-loans and user charges. The SOE model was layered on the existing agency model for public provision of transport infrastructure and became locked-in for new mega-projects. Combined with a general lack of institutional support for PPPs and a strong national economy the PPP model in Danish transport infrastruc-ture governance was excluded. The paper contributes to the renewed academic interest in SOEs and the results are relevant to other countries coping with public-private mixes in infrastructure governance.",
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