> **来源：[研报客](https://pc.yanbaoke.cn)** Technical and statistical report # International Investment in Sustainable Infrastructure: The Role of Public-Private Partnerships Technical and statistical report # International Investment in Sustainable Infrastructure: The Role of Public-Private Partnerships © 2025, United Nations All rights reserved worldwide Requests to reproduce excerpts or to photocopy should be addressed to the Copyright Clearance Center at copyright.com. All other queries on rights and licences, including subsidiary rights, should be addressed to: United Nations Publications 405 East 42nd Street New York, New York 10017 United States of America Email: publications@un.org Website: https://shop.un.org/ The designations employed and the presentation of material on any map in this work do not imply the expression of any opinion whatsoever on the part of the United Nations concerning the legal status of any country, territory, city or area or of its authorities, or concerning the delimitation of its frontiers or boundaries. Mention of any firm or licensed process does not imply the endorsement of the United Nations. This publication has not been formally edited. United Nations publication issued by the United Nations Conference on Trade and Development UNCTAD/DIAE/2025/6 ISBN: 978-92-1-159593-2 eISBN: 978-92-1-154581-4 Sales No. E.25.II.D.42 # Acknowledgements This report was prepared by a team at UNCTAD, led by Amelia U. Santos-Paulino, under the guidance of Richard Bolwijn and the overall direction of Nan Li Collins, Director of the Investment and Enterprise Division at UNCTAD. The principal researcher for the report was Claudia Trentini. Stephanie Mageste and Prachi Sharma provided background research. Research assistance was carried out by Joao de Camargo Mainente and Yagnesh Kataria. Pascal Mayer and Iris Mbok provided research support in the earlier stages of the project. The report also benefited from comments and contributions from Ashraf Abdelaal, Mathilde Closset, Chantal Dupasquier, Hamed El Kady, Maha El Masri, Yi Liu, Massimo Meloni, Diana Rosert, and Frida Youssef from UNCTAD. Valuable feedback was provided by Elisabeth Türk, and the team from the Public-Private Partnerships Section at the United Nations Economic Commission for Europe including Tony Bonnici. UNCTAD gratefully acknowledges the extensive contributions and comments by Barclay James (St Mary's University), Paul Vaaler (University of Minnesota) and Elisabeth Yi Wang (Leeds University). UNCTAD also thanks Ziad-Alexander Hayek and the team at World Association of PPP Units and PPP Professionals including Jean-Christophe Barth-Coullaré and Jyoti Bisbey; Arkebe Oqubay (School of Oriental and African Studies, University of London); Ugo Panizza (Graduate Institute, Geneva), Kunal Sen (UNU-WIDER); Ancor Suarez Aleman and Christian Volpe (Inter-American Development Bank); and Mamiko Yokoi-Arai (Organisation for Economic Co-operation and Development) for their valuable inputs and suggestions. We also thank Pablo M. García, Jaime Granados, and Fabrizio Opertti (Inter-American Development Bank) for their insights during the inception phase of the project. UNCTAD is grateful for the comments received from participants at key international events. These include the UNU-WIDER Conference Safeguarding Tomorrow – Innovative Approaches to Growth and Equity, held in Helsinki, Finland, in June 2025, and at the Academy of International Business Annual Conference (AIB 2025) in Louisville, Kentucky, during June 28- 2 July 2025. At UNCTAD, production of the report was supported by Elisabeth Mareschal and Katia Vieu. The publication has not been formally edited. # Table of contents Acknowledgements.. 3 Key messages. 1 Introduction 4 a. Background and objectives 4 b. Analytical scope 6 Part I. The international PPP landscape 9 1. Evolution of international PPPs 9 2. Current PPP trends 13 Part II. Key features of international public-private partnerships 22 1. Diverse de-risking mechanisms 22 2. The role of governments and development finance institutions 30 Part III. Challenges hindering the growth of international PPPs 40 1. The cost of capital 40 2. Operational and financing setbacks 47 Concluding remarks 58 References 61 Annex 65 # Key messages International investment in sustainable infrastructure – including both hard infrastructure sectors like transport and energy, and soft infrastructure sectors such as health, education, water, and sanitation – remains insufficient in both volume and distribution. Sectoral and geographical diversity is lacking, with the poorest and smallest countries often bypassed despite their urgent financing needs. Public private partnerships (PPPs) offer significant potential to help close the sustainable development goals (SDG) financing gap. Among PPPs, international PPPs – those involving international investors as project sponsors, and the focus of this report – are relatively significant contributors to investment in developing economies. Their impact is particularly notable in the least developed countries (LDCs), where they account for roughly one-third of all PPP projects, compared with less than 20 per cent in other developing economies. Nevertheless, international investment in PPPs in developing countries remains insufficient. Two major imbalances shape international PPP activity: sectoral and geographical. From a sectoral perspective, since 2015, renewable energy has been dominant, accounting for over 70 per cent of projects. While this reflects strong momentum in sustainable infrastructure it also highlights limited diversification into other critical sectors such as transport, and social infrastructure. Geographically, activity remains highly concentrated, with ten developing countries, led by Brazil, India, Viet Nam and the Philippines, accounting for nearly 60 per cent of all international PPP projects. In contrast, many smaller or lower income economies remain largely excluded from international PPP flows. Structural constraints, such as high perceived risks and limited institutional capacity, continue to hinder progress. Unlocking the full potential of PPPs requires long-term government planning, strengthened regulatory frameworks, robust institutional frameworks and dedicated PPP units with sufficient authority to manage complex projects. In addition, it requires improved project bankability. Risk mitigation instruments, often provided by multilateral development banks (MDBs), can support this and help build investor confidence. The findings of this report highlight four critical dimensions that must be addressed to advance international investment in sustainable infrastructure: robust legal frameworks, integrated planning and contract design, innovative financing mechanisms, and strengthened implementation and management capacity. # Legal and regulatory frameworks Establishing clear and predictable legal frameworks for PPPs is essential to attract international investment. Countries with robust PPP laws and dedicated implementing agencies tend to secure more international projects. The number of international PPP projects can grow by as much as 50 per cent in the immediate years following the adoption of PPP legal frameworks. Legal clarity enhances investor confidence and reduces risks, especially in high-risk environments. Dispute resolution mechanisms must be carefully designed. PPPs are disproportionately represented in investor-State dispute settlement (ISDS) cases, particularly in infrastructure sectors, highlighting the need for dispute-prevention mechanisms and balanced contract design. Their long-term nature and exposure to regulatory changes make them more vulnerable than other investment modalities, as seen in the surge of renewable energy-related claims following policy reforms. Reforming international investment agreements (IIAs) and incorporating dispute-prevention and mediation clauses can help safeguard regulatory flexibility and reduce exposure to costly litigation. # Planning, prioritization, and contract writing Planning challenges are a frequent cause of project failure. Because PPPs in soft infrastructure sectors such as health, education, water and sanitation, need careful structuring to safeguard affordability, equity and universal access, they show a relatively high incidence of planning-related disruptions, accounting for over 30 per cent of project failures. Strengthening planning processes and coordination across institutions is essential to improve implementation rates in sectors with public service responsibilities. Institutional capacity and project governance are critical. While many countries have established legal frameworks for PPPs, translating these into practice remains a significant challenge. Addressing this requires the development of operational capacity, particularly through the establishment of dedicated PPP units with the technical expertise to plan, structure, and manage complex projects. Transparent procurement and contract disclosure foster public trust and accountability, which are vital for sustaining private investment, especially from overseas. Most infrastructure investment remains domestic and government-led. To broaden the investor base and accelerate progress toward the SDGs, countries should consider strengthening the role of investment promotion agencies (IPAs) in preparing and promoting sustainable infrastructure projects. This is particularly important in underinvested sectors such as water and sanitation, healthcare and education, as well as in vulnerable economies that face persistent challenges in attracting adequate capital. For example, nearly 60 per cent of small island developing States (SIDS) have received fewer than three international PPP projects over the past 25 years. LDCs are also largely missing out on international projects, with only a small number of countries consistently engaging international investors for infrastructure development. Balanced contracts enhance bankability and reduce project risks. Long-term offtake agreements, minimum revenue guarantees, performance-based viability risk (PVR) contracts, and viability gap funding can help improve bankability by reducing the likelihood of delays, renegotiations, and cancellations. In addition, government-backed payment mechanisms improve revenue predictability and attract investment. Instruments such as Power Purchase Agreements (PPAs) and PVR contracts can serve as effective risk-sharing tools, increasing the appeal of investments, particularly in non-energy sectors. # Effective de-risking and innovative financing instruments Securing financing for PPP projects remains a key challenge for developing countries, especially LDCs, limiting their ability to advance infrastructure and achieve the SDGs. Blended finance, which combines development finance institution (DFI) and public funding with private capital, is still limited in scale but continues to grow. DFIs including national, bilateral and multilateral sources of funds, together with targeted government interventions such as equity contributions, grants, or concessional loans, can significantly reduce the cost of capital, especially in high-interest-rate environments. Blended finance structures enable the funding of projects that the private sector may be unwilling or unable to support on its own, particularly in contexts of elevated borrower or country risk. For example, 38 per cent of DFI-supported syndicated loans are directed to high-risk countries or to those rated "below investment grade" by international credit rating agencies. DFIs including MDBs play a key role in mobilizing private capital in non-investment-grade economies. Their involvement signals stability and improves financing terms – lowering borrowing costs (loan spreads) by almost 80 basis points, enabling longer maturities (by over two years) and larger tranches (by 36 per cent) for private investors in subsequent transactions. Targeted support for LDCs and SIDS remains a priority, particularly through concessional finance, guarantee schemes and regional project preparation facilities. Government equity participation and export credit agency (ECA) guarantees can further reduce borrowing costs and enhance project creditworthiness. However, their support is often concentrated in specific, high-value, low-risk projects, typically aligned with the interests of home-country investors and contractors. Striking an effective balance between public actors (including DFIs, ECAs and governments) and the private sector is critical to expand the sectoral and geographical reach of international PPPs. # Implementation and management Effective implementation requires sound project governance, policy stability, and institutional coordination. Many international PPPs face setbacks due to financial constraints and government interventions. Small-scale PPPs offer high-impact solutions in underserved regions and should be supported through tailored policies, financing tools, and capacity-building for subnational authorities. For vulnerable economies, these projects help build institutional capacity and confidence to manage larger international PPPs over time. They also strengthen local capital markets, foster innovation, and expand access to essential services when aligned with inclusive governance and local development priorities. Smaller domestic PPPs experience fewer challenges than larger projects. Less than one per cent of PPPs valued under $20 million encounter major setbacks, compared to over 5 per cent of projects exceeding$ 1 billion. UNCTAD can leverage its convening power through platforms such as the World Investment Forum to promote policy frameworks that integrate the proven benefits of small-scale PPPs alongside large projects. By facilitating knowledge exchange, fostering partnerships, and promoting best practices, UNCTAD helps countries strengthen policy frameworks and build capacity for sustainable infrastructure development. # Introduction # a. Background and objectives The global investment landscape is at a critical juncture. Despite numerous global commitments, frameworks, and agendas aimed at accelerating financing for sustainable development, international investment in the sustainable development goals (SDGs) remains insufficient, lacks sectoral and geographical diversity, and continues to bypass many of the poorest countries most in need of financing. Developing countries are facing an annual SDG financing gap estimated at $4.3 trillion, with infrastructure investment accounting for a significant share of this shortfall. This gap continues to widen amid geopolitical instability, macroeconomic uncertainty, and fiscal pressures. Notably, investment in renewable energy alone accounts for more than half of the total, at$ 2.2 trillion per year (UNCTAD, 2023; UNCTAD, 2024a). The global infrastructure investment gap is projected to surpass the $15 trillion by 2040, underscoring the scale of the challenge (McKinsey & Co 2025; Global Infrastructure Outlook, 2024; Ramey, 2020). Tackling this challenge requires innovative and scalable financing mechanisms. Public-private partnerships (PPPs) have long been promoted as a means to mobilize long-term private investment, technical expertise, and operational capacity particularly in countries facing fiscal constraints, infrastructure deficits, and limited borrowing space. Since the mid-1990s, the adoption of PPPs in developing economies has accelerated, driven by liberalization, privatization, and the growing involvement of multilateral development banks (MDBs) and other development finance institutions (DFIs) in addressing infrastructure financing gaps. This momentum has continued, with PPPs increasingly regarded as a strategic mechanism to advance development amid tightening public budgets, especially following the 2008 global financial crisis (Engel et al., 2022). Despite substantial policy attention and the active involvement of multilateral institutions in helping countries address infrastructure financing gaps, international investment flows into PPPs remain sluggish. The research in this report highlights that the volume and pace of FDI mobilized through PPPs in developing countries is not rising fast enough to support sustainable development objectives, especially in the poorest and most vulnerable economies. This is particularly concerning given the critical role PPPs are expected to play in closing infrastructure and service provision gaps where public resources are insufficient and private capital is crucial. This disconnect is not due to a lack of analysis or ambition. Numerous frameworks, toolkits, and institutional recommendations already exist to guide countries in developing effective PPP programmes. $^{1}$ Yet, many developing countries still face institutional and structural challenges in managing PPPs. The effectiveness of PPPs depends on sound legal frameworks, transparent procurement, strong institutional capacity, and well developed financial markets. When well structured, PPPs can enhance fiscal sustainability by spreading costs over time and attracting private investment. Limited legal and fiscal expertise, weak project management, and underdeveloped capital markets hinder effective implementation, especially in LDCs and SIDS (ADB, 2008; IBRD, 2017; UNCTAD, 2011 and 2025a). Even middle-income countries often struggle with politicized procurement and inadequate stakeholder engagement (IBRD, 2017). Moreover, weak oversight and poor project design can lead to fiscal risks and undermine public trust. PPPs can introduce contingent liabilities that may obscure the true level of public debt unless they are transparently disclosed – ideally in the annex of national budgets. In light of debt sustainability concerns, governments should exercise caution when adopting PPPs, ensuring that fiscal risks are properly assessed and reported. Furthermore, institutional readiness, including dedicated PPP units and clear regulatory frameworks, is essential for successful implementation. To help address these persistent challenges and unlock greater private investment, MDBs and DFIs play a key role in enabling PPPs, particularly in high-risk environments. Their support through concessional finance, technical assistance, and risk mitigation helps improve project design, reduce investment risk, and mobilize private capital at scale. MDBs and DFIs participation also often extends the maturity of syndicated loans and increases the number of participating lenders which are essential factors for financing large, complex, and long-gestation infrastructure projects (Broccoli et al., 2021, Avellan et al. 2024). The recent adoption of the "Compromise de Sevilla" at the Fourth International Conference on Financing for Development underscores the global urgency to rethink investment models. It calls for scaling up partnerships that align with national development strategies, are embedded in strong governance systems, and prioritize long-term development impact over short-term returns. The outcome document also highlights the need to reform the international financial system, improve debt sustainability, and mobilize both public and private capital to close the $4.3 trillion annual SDG financing gap. Amid persistent financing gaps and the pressing need to accelerate investment in sustainable infrastructure, this report offers a timely and original analytical contribution to understanding how private capital can be mobilized for SDG-aligned infrastructure. This study fills a critical gap in the literature by shedding light on key challenges and opportunities in PPPs, the enabling policy and regulatory frameworks, and the evolving role of MDBs and DFIs in catalyzing private investment. It explores critical questions, including: What is the current landscape of private capital investment in infrastructure that contributes to the achievement of the Sustainable Development Goals (SDGs)? What trends and structural conditions influence the success or failure of PPP models across regions and sectors? And how do domestic and international policy, legal, and regulatory environments shape PPP outcomes? The report also examines the role of MDBs in mitigating risk and catalyzing private finance, as well as the evolving intersection between PPPs and international investment agreements (IIAs), including trends in investor-State dispute settlement (ISDS) cases brought under IIAs. To answer these questions, the report pursues three main objectives: Identify some of the key barriers that impede the growth of FDI into PPPs in developing countries, including legal, institutional, financial, and regulatory obstacles. - Assess common setbacks in international PPP projects, from project preparation and procurement to contract enforcement and risk management. - Evaluate the role of MDBs and DFIs in enabling improved international PPP outcomes, particularly in reducing the cost of capital, and assess their contributions to capacity building, risk mitigation, and investment mobilization. Unlocking international private capital is key to building resilient infrastructure and closing the SDG financing gap The scope of the report is limited to international PPPs, i.e. PPP arrangements that involve cross-border investment in developing countries. While the broader PPP ecosystem includes domestic partnerships and local capital, this study focuses specifically on the role of international investors and institutions in financing infrastructure for sustainable development. The report is structured in three main parts. The remainder of this introductory section provides the analytical foundation for the report and its conceptual framework, explains the distinction between domestic and international PPPs, and describes the datasets used for the research (further detailed in the annex). It also delimits the scope of the analysis. Part I then reviews the international PPP landscape, tracing its evolution and identifying current trends across regions, income groups, and sectors. Part II explores key features of international PPPs, focusing on the use of diverse de-risking mechanisms and the prominent roles played by governments and development finance institutions. Part III examines the main challenges hindering the growth of international PPPs, including the high cost of capital, operational and financing setbacks, and legal and dispute settlement risks. It highlights how blended finance and technical support help address these constraints. The final section presents policy implications and recommendations. # b. Analytical scope PPPs are cooperative arrangements between a government agency and a private-sector company used to finance, build, and operate projects such as public transportation networks, ICT infrastructure, or hospitals (see Annex for further details). Typically, the private party establishes a Special Purpose Vehicle (SPV) – a project company created specifically to implement the PPP contract (figure 1). The public entity may hold an equity stake in the SPV by contributing capital to the project. Importantly, in a PPP, it is usually the government – not private sponsors – that initiates the project. Private sponsors participate as bidders in a tendering process led by the public sector (Weber et al. 2016). Figure 1. Typical structure of a public-private partnership Source: UNCTAD. In a long-term contract between the private sector and a public authority, certain project functions are transferred to the private partner (the SPV) for the provision of a public asset or service. In such arrangements, the private party assumes significant risk and management responsibility, and compensation structured through various mechanisms – including performance-based payments, availability of payments, or take-or-pay provisions – depending on the nature of the project and the allocation of risks. The defining elements for a PPP are thus: - A long-term contractual relationship, typically 20 - 30 years. - The provision of a public asset or service. - A structured mechanism for sharing risks, responsibilities, and rewards. The functions for which the private party is responsible vary and depend on the type of asset and services involved. These functions may include build, operate, own, finance, maintain and define the types of PPPs. The different arrangements/ contract types can be broadly categorized into three groups, which are not necessarily mutually exclusive (e.g., build-own-operate arrangements may include both private and public ownership: 1. Contracts that foresee full private ownership of the project: a typical contract is the Build-Own-Operate (BOO). In this arrangement, the private partner builds, owns, and operates the facility, bearing commercial and operational risks, with no transfer back to the government at the end. For example, most of the international projects building new energy generation facilities are BOOs as international investors provide the equity to set up the project company, raise additional finance against the expected cash flows and share risks with local authorities through a Power Purchasing Agreement (PPA). This form of partnership is increasing, and accounts for 70 per cent of international projects and for almost 80 per cent of domestic ones. This trend is driven by the almost exclusive use of this type of contract in the renewable energy sector but also by an increasing use of BOO in the economic infrastructure sector. 2. Contracts that foresee final full public ownership of the project: a typical contract is the Build-Operate-Transfer (BOT). A government hands overall construction and operations to a private party for a set number of years (often several decades or more). After that period, it is transferred to the government. In addition to BOT contracts, these may include other combinations of functions such as Design-Build-Finance-Operate (DBFO) or Build-Transfer-Operate (BTO). The share of international projects using this type of contract is below 5 per cent and is concentrated in the transport infrastructure construction, with toll roads concession model as a prominent PPPs bring together capital, expertise, and accountability to deliver sustainable infrastructure and advance the SDGs example. The use of temporary private ownership contracts is declining. In the leading sector - transport infrastructure - their share fell from approximately 20 per cent of projects in the early 2000s to just 5 per cent over the past five years. This was partly possible through the adoption of purchasing agreements that help allocate risk between partners to other sectors. 3. Public - Private shared ownership of the project company: such models foresee joint participation in the project company (SPV) of the private and the public sector. They are especially prevalent in social infrastructure or projects related to human capital and health sectors where the return profile of investment is highly regulated, such as hospitals, schools, and water management and in high-risk economies such as LDCs, as a means to reduce perceived structural country-risk and attract private investment. A defining feature of PPPs is the provision of a public asset or service, often in areas that are directly linked to the achievement of the SDGs. Consequently, the sectors analyzed are primarily related to infrastructure: - Hard or economic infrastructure, which includes power, transportation, telecommunications, and waste and recycling, and is closely related to SDGs 7 (Affordable and Clean Energy), 9 (Industry, Innovation and Infrastructure), and 11 (Sustainable Cities and Communities). - Renewable energy - encompassing solar, wind, hydroelectric, geothermal, biomass, and green hydrogen energy sources - is central to advancing SDG 7 and accelerating the energy transition, and a critical component of SDG 13 (Climate Action). - Soft or social infrastructure, covering sectors such as health, education, water and sewage, and selected public services, including police forces and museums, which contribute directly to SDGs 3 (Good Health and Well-being), 4 (Quality Education), and 6 (Clean Water and Sanitation). - Industry, comprising commercially oriented projects that either operate under a PPP contract or involve the provision of public assets or services, and which support productive capacity and decent job creation in line with SDGs 8 (Decent Work and Economic Growth) and SDG 9. Given the increasing role of international PPPs as a vehicle for foreign investment in sustainable infrastructure, this report focuses specifically on cross-border projects. An international PPP implies that at least one sponsor (owner of the project's equity) in the project finance deal is a foreign resident (Viné et al. 2021). Whenever this foreign equity share is above 10 per cent this is considered FDI. The equity investors in the project company are typically denominated sponsors, distinguishing them from those providing project financing through various forms of debt. Sponsors may include engineering or construction companies, utilities companies, financial services companies and infrastructure funds (UNCTAD, 2025a). # Part I. The international PPP landscape # 1. Evolution of international PPPs PPPPs have long been promoted as a strategic tool to mobilize private investment, technical expertise, and operational capacity - especially in developing economies facing fiscal constraints and infrastructure deficits as discussed earlier. Since the mid-1990s, PPP adoption has accelerated, driven by liberalization, privatization, and the growing role of MDBs and DFIs. This momentum intensified after the 2008 global financial crisis, as PPPs became central to development strategies amid tightening public budgets. Over the past two decades, however, PPPs have undergone a notable evolution. Once hailed as a panacea for closing infrastructure gaps and mobilizing private finance without straining public budgets, they are now more widely understood as complex, multifaceted instruments influenced by law, governance, market dynamics, and international development agendas. This shift is also reflected in literature. At their core, PPPs aim to allocate risks and responsibilities between public and private actors in ways that ensure long- term service delivery, value for money, and fiscal sustainability (World Bank, 2017; Engel et al., 2020). Existing research underscores that PPP performance depends on complementary factors such as institutional capacity, political will, macroeconomic stability and credible project pipelines. Countries with stable regulatory environments, effective procurement procedures, and sound fiscal governance tend to attract more international PPPs (UNCTAD 2011, Hammami et al., 2006; OECD, 2023). Institutional capacity and fiscal constraints are also key determinants of policymakers' decisions to adopt PPPs, especially in developing countries (Reyes-Tagle and Karl, 2016). In this context, MDBs can play a catalytic role, particularly in developing economies: their participation enhances creditworthiness, extends loan maturities, and helps mobilize private finance potentially leveraging up to seven times their own investment (Broccoli et al., 2021; Gurara et al., 2020). A recurring theme is the importance of governance and long-term fiscal discipline. PPPs can shift costs off-budget and outside conventional public finance rules, but this flexibility may come at the expense of fiscal transparency and future obligations. International investment in PPPs remains below its potential The attractiveness of PPP projects is shaped by regulatory frameworks, risk allocation mechanisms, and financing arrangements Studies caution that PPPs should not be seen as fiscal shortcuts; rather, robust appraisal and oversight mechanisms are needed to avoid contingent liabilities and renegotiations (IMF, 2006; Engel et al., 2020). Tools like present value-of-revenue (PVR) contracts are proposed to mitigate renegotiation risks by linking project duration to revenue performance. Risk allocation remains central to PPP design. Efficient PPPs bundle design, construction, operation, and maintenance under a single contract, incentivizing long-term performance and innovation. However, the public sector must retain oversight and absorb risks it is best placed to manage, such as political or regulatory changes, while the private sector bears commercial and operational risks (European Investment Bank, 2023; OECD, 2023). Misallocated risks, opaque procurement, or weak contract enforcement have led to high-profile failures, triggering fiscal burdens or contract renegotiations that weaken incentives and accountability (Guasch, 2004; Engel et al., 2020). Sector-specific dynamics also shape PPP adoption. In sectors such as renewable energies, international PPP activity accelerated in the 2010s due to falling technology costs, national and international climate regulations, and rising demand for green infrastructure (UNCTAD, 2023, UNECE, 2022; World Economic Forum, 2025). The growing focus on environmental, social, and governance (ESG) standards and SDG alignment has reinforced this trend, with PPPs increasingly assessed based on their contribution to inclusion, resilience, and climate goals rather than pure financial metrics (World Bank, 2022; UNCTAD, 2023). Conversely, traditional sectors such as transport remain dominated by user-pay PPPs with established risk-sharing models and legal precedents. In recent years, the international PPP agenda has evolved. A new generation of partnerships i.e. "PPPs for the SDGs" which prioritize access, equity, environmental sustainability, replicability, and stakeholder engagement have been promoted as a guiding framework for sustainable infrastructure development (UNECE, 2022). These principles align with a shift away from project count toward project quality. Global institutions increasingly promote performance-based criteria, stakeholder consultation, and transparent contract management as key components of effective PPP frameworks (World Bank, 2022; OECD, 2023). However, the success of PPPs hinges on multiple factors, including the existence of a stable legal framework, transparent procurement processes, and capable public institutions. Without these, PPPs can become fiscal liabilities rather than solutions. Numerous studies suggest that upstream improvements to the institutional environment can impact downstream PPP investments. The success and attractiveness of PPP projects across various sectors and regions are often shaped by regulatory frameworks, risk allocation mechanisms, and financing arrangements. In Latin America, political and social will, along with institutional capacity are significant predictors of PPP investment (Casady and Suárez-Alemán 2025). PPPs that are well structured can contribute to long-term fiscal sustainability by distributing costs over the lifecycle of a project, thereby reducing upfront public expenditure (ADB et al., 2016). However, this advantage is conditional on rigorous value-for-money assessments and effective contract management, especially given that private financing often carries higher costs than sovereign borrowing. On the contrary, weak oversight can lead to costly renegotiations, corruption, or off-balance-sheet liabilities that undermine public finance (OECD, 2010). The design and execution of PPPs must therefore be grounded in institutional readiness. Countries with established PPP frameworks and dedicated implementing agencies have consistently demonstrated better outcomes in terms of project quality, investor confidence, and financing volumes. For example, Latin American countries with PPP laws and project pipelines have attracted more robust investment flows, especially in transport, renewable energy, and healthcare (IBRD, 2017; OECD, 2023). A PPP legal framework comprises the policies, procedures, institutions, and rules that govern the entire PPP lifecycle: from identifying and assessing projects to selecting, prioritizing, budgeting for, and procuring them (World Bank, 2017). A foundational step in establishing this framework is the articulation of a national PPP policy, which typically outlines the rationale, objectives, scope, guiding principles, and governance arrangements of the PPP programme. Central to this framework is a robust legal foundation that enables the government to engage in PPPs and sets clear boundaries for their implementation. This may include dedicated PPP legislation, relevant public financial management rules, or sector-specific laws and regulations. By clearly defining roles and responsibilities and establishing transparent rules for structuring, financing, and managing projects, PPP laws create a stable and predictable environment that encourages private sector participation in public infrastructure development. Two major global developments significantly influenced the wave of PPP law adoption globally. The 2008 global financial crisis was one of the catalysts, prompting governments, especially those under fiscal stress, to seek private capital for infrastructure through PPPs. In response, many countries either introduced new PPP laws or strengthened existing ones to attract investment. This momentum was reinforced by the adoption of the 2030 Agenda for Sustainable Development in 2015. It emphasized the role of PPPs as a tool to close infrastructure financing gaps while highlighting the need for fair risk-sharing and other governance mechanisms. As a result, PPP legislation surged globally: from 2000 to 2022, 99 countries enacted PPP laws, with a notable spike in developing countries, 26 of which adopted new laws between 2014 and 2016 alone. Patterns of PPP legal framework adoption differ across regions. Developed economies, particularly Europe and North America, adopted PPPs in the 1990s, leading to mature systems shaped by incremental legal reforms and institutional support (e.g., the European PPP Expertise Center (EPEC) in the European Union). In Canada there is a federal PPP unit, while in the United States the approach is at state-level. In contrast, developing economies accelerated PPP law adoption later, in the 2000s, often influenced by regional cooperation and multilateral development banks. Latin America moved comparatively early in formalizing PPPs, with 16 countries adopting dedicated legislation between 2004 and 2022. In Asia, 23 countries adopted such legislation between 2010 and 2020, supported by regional frameworks and institutional support from organizations such as the Association of Southeast Asian Nations (ASEAN) and the Asian Development Bank. In Africa PPP legislation has expanded rapidly in recent years, with 42 countries having enacted laws by 2023. The adoption of PPP legal frameworks signals commitment and transparency to investors Since 2020, the pace of new PPP law enactments has slowed markedly, indicating a shift in focus from creating laws to implementing them. Policymakers are increasingly turning attention to the effectiveness of existing PPP frameworks - ensuring that the laws translate into successful, sustainable projects on the ground. Many countries are conducting reviews of their PPP policies to introduce second-generation reforms emphasizing value for money, social inclusion, and climate resilience in PPP projects. Provisions are being added or updated to require feasibility studies, stakeholder consultations, and integration of Environmental, Social, and Governance (ESG) standards (Aizawa, 2018). The adoption of PPP legal frameworks by developing countries sends a clear signal to investors by providing a clear set of rules and improved mechanisms for risk allocation, which often leads to a surge in project activity (figure 2). This effect is more pronounced for international projects, suggesting that a legal framework is especially instrumental for attracting cross-border investment. For both domestic and international PPPs, after an initial period of growth, the number of investment projects stabilizes. This trend can be attributed to several factors, including a shift toward more selective and strategic project approvals, as well as a natural deceleration following the investment in the most viable or market-attractive projects. In some cases, governments have also begun refining implementation practices to emphasize quality over quantity, prioritizing long-term value and sustainability. These developments reflect a maturing PPP landscape, where the availability of well-prepared projects and effective regulatory frameworks are critical to sustaining momentum (World Bank, 2024a; see also part III sections 2 and 3). # Figure 2. Public-private partnership legal frameworks boost international project activity Number of PPP projects in developing economies: three years before and after adoption of PPP law (Index: year 0 =100) Source: UNCTAD, based on LSEG Data & Analytics and World Bank PPP Legal framework dataset. While the adoption of PPP laws has played a central role in increasing international PPPs, several other critical factors influence their success and attractiveness. National investment policy measures, such as clear legal frameworks, transparency provisions, and strengthened institutional capacity, create the foundation for private sector engagement. These measures help mobilize capital while ensuring alignment with national development goals. However, the presence of a legal framework alone is not sufficient (UNCTAD, 2015). Despite progress in adopting PPP laws, many countries face ongoing challenges in enforcement and adapting frameworks to evolving needs. Weak institutional capacity often hinders effective implementation, with some PPP units lacking the authority or resources to oversee compliance. Additionally, poorly designed risk-sharing arrangements have led to project failures and fiscal stress, highlighting the need for more balanced and transparent PPP structures. Beyond legal and institutional aspects, macroeconomic and political stability remain essential prerequisites for attracting international PPPs, as investors seek predictability and risk mitigation. Strong government support and commitment to project delivery also send a clear signal of credibility to markets. Moreover experience in developing and implementing PPPs, even if limited to small-scale or pilot ones, can help to build investor confidence, especially when accompanied by support from MDBs or development finance institutions, which help de-risk projects and improve bankability of subsequent projects. Additionally, the affordability of tariffs for end users is a key consideration in developing economies, particularly in essential services like water and electricity (Bisbey et al 2025, World Bank, 2025). International studies show that in rural settings, PPPs can also support sustainable development, provided that local governance structures are effectively engaged (Bjarstig and Sandstrom, 2017). Sector-specific market dynamics also shape PPP activity. For example, the global surge in renewable energy PPPs has been driven not only by supportive legal reforms but also by declining technology costs, energy transition policies and strengthened climate-related regulations. These market and regulatory shifts have made renewables more commercially viable and attractive to both international and domestic investors. Ultimately, the academic and policy literature emphasizes that PPPs must be integrated into a country's broader development strategy. International PPPs flourish in environments where a robust legal framework is matched by macroeconomic stability, institutional trust, and sectoral readiness. As countries move beyond first-generation reforms, the challenge lies not in adopting more laws, but in applying them to deliver sustainable, inclusive, and efficient infrastructure outcomes. Despite the substantial literature on PPPs, critical knowledge gaps persist – particularly concerning the structural and financial design of PPPs, and the interaction between legal frameworks, institutional capacity, and international investment regimes. This report seeks to address these gaps by offering a structured, policy-relevant analysis that bridges financial, regulatory dimensions and geopolitical dimensions. # 2. Current PPP trends The landscape of international PPP activity has evolved significantly in recent years. Following the adoption of the SDGs in 2015, there has been a marked increase in international PPP deals, driven by the global push to mobilize private capital for sustainable development. This shift has been especially pronounced in sectors aligned with the SDG agenda – most notably renewable energy, which has seen a surge in investment as it emerged as a priority within sustainable development strategies (figure 3). Policy reforms in many developing countries, along with support from DFIs, helped de-risk investments and attract foreign sponsors. DFIs, through bilateral loans or guarantees, play a significantly larger role in LDCs than in developing economies. They directly financed 30 per cent of projects in LDCs and provide loan guarantees for 14 per cent, nearly double their respective shares in developing countries (17 and 7 per cent). Figure 3. International public-private partnership deals started growing after 2015 Announced deals by source investment (Billions of dollars and number) Source: UNCTAD, based on information from LSEG Data & Analytics. While domestic PPPs account for a larger share of global deals in most regions, international PPPs play a more prominent role in Africa and in Latin America and the Caribbean, where their shares significantly exceed those of domestic projects (figure 4). In Latin America and the Caribbean, international PPPs account for 16 per cent, compared with just 5 per cent for domestic projects.. These disparities may reflect structural limitations in domestic capital markets and targeted foreign investment strategies in specific infrastructure sectors (see part III). In Africa, regional initiatives such as the Programme for Infrastructure Development in Africa (PIDA) also influence foreign participation in PPPs. Similar dynamics are observed in Southeast Asia, where ASEAN-led infrastructure programmes attract cross-border investment. More broadly, the success and appeal of PPPs are shaped by enabling regulatory frameworks, effective risk allocation, accessible financing arrangements, and a development strategy (national or regional) that clearly sets out a plan for key infrastructure projects. Figure 4. International public-private partnerships play a more significant role in Africa and Latin America compared to domestic ones Share of announced deals by destination region relative to global total, 2020-2024 (Percentage of number) Domestic International Source: UNCTAD, based on information from LSEG Data & Analytics. In LDCs, international PPPs are not only relatively more frequent but also significantly larger in value compared to domestic ones (figure 5). This reflects the limited capacity of domestic investors to finance large-scale infrastructure projects. The SDG agenda has amplified the role of international capital in these economies, particularly in social infrastructure sectors such as health, education, and clean energy. Foreign investors, often supported by MDBs or initiatives like China's Belt and Road Initiative, have stepped in to fill critical financing gaps. In comparison, international investment in SDG-relevant sectors grew by 25 per cent between 2015 and 2023, with renewable energy projects nearly doubling in number (UNCTAD, 2025a). However, the distribution remains uneven, with many LDCs still underserved. This underscores the importance of targeted international support and blended finance mechanisms. Figure 5. International public-private partnerships in LDCs are twice as large as domestic ones Announced deals by source of investment in LDCs (Billions of dollars and number) Source: UNCTAD, based on information from LSEG Data & Analytics. Large-scale initiatives such as China's Belt and Road Initiative (BRI), launched in 2013, have further highlighted the role of cross-border infrastructure partnerships in addressing connectivity gaps and catalyzing investment flows (box 1). While PPPs hold significant potential to bridge the SDG financing gap, international investment flows into these arrangements remain insufficient. Investment in renewable energy surged in recent years, reflecting its prioritization within the SDG agenda (figure 6). However, this growth has not been sustained. Between 2022 and 2024, international PPPs in developing countries declined by 42 per cent in value and 45 per cent in number, largely due to adverse macroeconomic conditions that constrained large-scale infrastructure and energy investments. # Box 1. The Belt and Road Initiative The Belt and Road Initiative (BRI) is a global infrastructure and development strategy launched by China in 2013. It aims to enhance international connectivity and promote economic cooperation through strategic investments and partnerships spanning over 150 countries and international organizations. In 2019, just prior to the COVID-19 pandemic, approximately 450 projects associated with the BRI had been announced (box figure 1.1). Most of these projects did not involve equity participation by MNEs from China; instead, they were primarily financed through loans underwritten by host economies. Consequently, few of these projects qualified as FDI. In many cases,