Improving Public Investment in Kazakh PPPS from a Portfolio Perspective: A System Dynamics Approach

Governments worldwide have implemented Public-Private Partnership (PPP) programs for developing public infrastructure easing fiscal pressure in the short term through leveraging capital investments from the private sector. Nevertheless, the length and complexity of these megaprojects jeopardize the long-term sustainability of this program due to economic and social challenges. In this study, we analyze the long-term social and financial implications of the Kazakh PPP program through a portfolio lens and using a System Dynamics modeling. To offer valuable insights for PPP decision-makers, the proposed model exposes the relationships between financial constraints, societal concerns, and PPP development. A causal-loop diagram unravels the underlying feedback relationships for proposing suitable policies to enhance the outcomes of the PPP programs. The model simulation identified two major drawbacks: the lack of accountability and transparency and the increasing long-term public subsidies required due to the profitability of special-purpose vehicles. Conducted policy analysis evaluates potential short- and long-term government strategies and provides the stakeholders with strategies for improving PPP program outcomes and addressing weaknesses. Ultimately, this research not only delineates the PPP landscape in an emerging economy but also yields actionable insights for policymakers, investors, and other infrastructure stakeholders in developing markets.