Filling the gap in urban transport: Private sector participation in transition countries

This paper reviews private sector participation (PSP) in urban transport services in central and eastern Europe and the Commonwealth of Independent States. It documents how the private sector is stepping in to address gaps caused by failing public services in poorer countries and identifies a strong negative relationship between GDP per capita and the degree of PSP. It also shows that, when controlling for the resource constraint, there is a positive relationship between the degree of PSP and the general reform process. The paper adds to international experience on the importance of fiscal factors in privatisation. It highlights that short-term constraints often push authorities to make decisions on private sector involvement without a full cost-benefit analysis and without the support of a developed regulatory framework.