PUBLIC-PRIVATE JOINT VENTURE, INVESTMENT AND ECONOMIC DEVELOPMENT
Keywords:
Economic development, investment, public-private joint venture, regional policy, European integration.Abstract
Public-private joint ventures are institutional forms chosen by local governments and city authorities to attract capital investment. In this paper we describe an economic set-up where a company decides on the volume of investment and the local authorities offer a package specifying sharing rules and taxes by a public-private joint venture. Such sharing rules can be designed to enhance the level of investment under the presence of distortions to stimulate economic development in the region. This might be important for Eastern European countries in transition in the case of foreign investments. In general, public-private joint venture contracts lead to efficient outcomes. However, we also provide an example in which a joint contract might not work.
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