Public-private partnerships arise from long-term agreements between private companies and the state, where part of the work that is the responsibility of the public sector is provided by private companies, this of course, under a prior agreement of shared goals, either to offer an optimal supply of public service, or to sustain public infrastructure.
Public-private partnerships can be in two ways: the first is when the government, with the help of tax revenues, provides investment capital and the operational part is carried out in conjunction with the private company. The second is when the industry private is who provides the capital, this is done on the basis of a contract with the public sector in order to facilitate the services established.
Some of these associations are linked to the transport sector, telecommunications, oil, energy and electricity, solid waste (urban cleaning), etc.
These types of alliances provide benefits, some of them are:
They serve as a way for private companies to provide innovation, experience and technology that serve to improve the provision of public services. They allow the diversification of the economy, transforming the country into more competitive and developing and promoting business and the associated industry. Improves relations between the public and private sectors.
However, these associations also have certain disadvantages:
High transaction costs and system management. Decrease in government action margins. Increase the profit share in the product. A legal framework can be produced against public investment. Levels of public debt are increasing. Negative consequences for future generations.
Similarly, it is important to note that these associations have a regulatory framework, by which they must be governed and that will depend on each country.
Finally, it can be said that public-private partnerships represent a proposal where both parties obtain benefits: the public sector sees its objectives achieved, thus fulfilling its citizens and the private sector, in addition to achieving economic benefits, they obtain a good share of responsibility social.
