Contracting-out public-private partnerships in mega-scale developments: The case of New Songdo City in Korea

Abstract

In the past few decades, we witnessed an increase in the number of mega-scale urban development projects that are undertaken in the context of public-private partnerships. However, due to the difficulties of public-private cooperation, there has been a growing interest being paid to separating of the roles of the public and private sectors and the contracting-out of the project. In a contracting-out arrangement, urban development is led by the private sector and entails the transfer of development tasks, risks, and responsibilities to the private sector based on a set of public requirements. By empirical case study of New Songdo City in Korea which is claimed to be the world's largest private sector-led development, this paper aims to examine whether the expected benefits of public-private partnerships materialize in practice when a mega-project is undertaken by a contracting-out arrangement. The New Songdo City project demonstrates that in practice, the benefits of a public-private partnerships generally deviate from the theoretical assumptions, other than the development opportunity offered to the private sector. Moreover, the project's challenges are less evident for the public sector but more pronounced for the private sector. Given the magnitude and longevity of the project as well as the strong hierarchical relationship between the Korean government and the business sector, there are great challenges to undertaking mega-scale urban development through a contracting-out public-private partnership.