Abstract
This study examines the heterogeneous effects of sector specific public private partnership (PPP) investments on economic growth across 20 developing countries, comprising 10 lower middle income and 10 upper middle income economies, over the period 1997 2020. Using the dynamic quantile regression (DQR) approach, the analysis captures both distributional and income level heterogeneity often overlooked in conventional models. PPP investments are disaggregated into the energy and transport sectors to assess their distinct contributions at varying stages of economic growth.
The results reveal that the impact of PPP investments varies significantly depending on country income level and growth phase. Energy PPPs generally foster growth in lower middle income countries, particularly at early and median growth stages, but exhibit mixed or negative effects in upper middle income countries, especially at low and very high growth quantiles. In contrast, transport PPPs demonstrate consistent positive effects in upper middle income countries across most growth levels, while their impact in lower middle income countries is initially negative or insignificant but becomes significantly positive at higher growth quantiles.
These findings underscore the importance of designing PPP policies that are sensitive to sectoral dynamics, income classifications, and macroeconomic conditions. While transport PPPs appear to offer a more stable and growth
enhancing contribution, energy sector PPPs demand targeted governance, robust institutional frameworks, and better alignment with national development priorities to yield consistent benefits. Overall, this study highlights that sector specific and context aware PPP strategies are essential for maximising the developmental potential of public private collaborations in infrastructure.