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Development of motivational mechanisms for risk transfer in public-private partnership projects

Vol. 30, Iss. 3, MARCH 2024

PDF  Article PDF Version

Received: 25 January 2024

Received in revised form: 8 February 2024

Accepted: 22 February 2024

Available online: 28 March 2024

Subject Heading: INVESTING

JEL Classification: Е02, Е22, О21, О22

Pages: 583–602

https://doi.org/10.24891/fc.30.3.583

Artem P. LAZAREV Moscow State Institute of International Relations (University) of the Ministry of Foreign Affairs of the Russian Federation (MGIMO University), Moscow, Russian Federation
aplazarev47@gmail.com

https://orcid.org/0000-0002-5457-4128

Subject. The article is devoted to the relations that arise between the State (public) partner and the private partner when distributing risks in public-private partnership (PPP) projects.
Objectives. The study aims to establish features of motivation mechanisms designed to encourage private investors to accept the risks arising when making a PPP agreement.
Methods. The basic research methodology is to determine the sensitivity of a private investor to certain types of risks based on systematization of motivation opportunities. The study employs content analysis and statistical data.
Results. The paper identifies risk groups for which motivational incentives are applicable, and establishes standard motivational mechanisms. It notes that the formation of motivational mechanisms should consider key trends in the influence of the State on private investors. The areas that significantly influence the motivation of a private investor include, in particular, eliminating economic inequality of economic agents, opportunity to access innovation, solving social and environmental problems, creating a stable business environment and necessary infrastructure.
Conclusions. Economic factors represent a key motivational element in risk allocation decisions, but they are not always completely dominant. Only a combination of individual and institutional measures can create an attractive environment for private investors considering the investment of their own capital in PPP projects. The findings can be used when concluding PPP project agreements at all levels, in accordance with the legislation on PPP, and ensuring the implementation of the proposed algorithm for the motivational mechanism formation.

Keywords: PPP project, motivation, risk-taking behavior, risk distribution, private investor

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