Public-Private Partnerships (PPPs) are agreements in which public entities delegate some of their responsibilities to a private partner under a long-term contract. Through PPPs, it is possible to achieve important economic development goals by managing infrastructure such as roads, airports, energy services, waste treatment systems, and activities that involve investment, management, and maintenance. It is not surprising that among the United Nations’ Sustainable Development Goals 2030, point 17.2 proposes to “Encourage and promote public, public-private and civil society partnerships (…)”.
PPPs are increasingly protagonists of international economic development. According to World Bank data, the number of PPP projects financed between 2014 and 2019 increased by 13%. The possibility of sharing the implementation project risks and mutual gain, which serve as incentives for this type of agreement, is the basis of this growth, increasing interest in PPPs globally. In this framework, Blockchain technology is inserted as a means to facilitate the operations necessary to achieve project success.
The Blockchain, a shared and immutable ledger, facilitates the process of registering transactions and tracking assets in a business network.
To understand the role of Blockchain technology in PPPs, however, it is necessary to analyze how they work. Once it has been established that PPPs are at the base of achieving great economic and social goals, it is necessary to note how traditional PPP development is full of challenges: the means for seeking funding and managing the project have a crucial role in project implementation.
Thanks to technological innovation, investments destined for public-private partnership projects could take on different forms than in the past. Digital investments, intended not as investments in digital technologies and the IT sector, but as digital solutions for managing the investment process, can represent a turning point in PPPs.
These types of investments in Blockchain are based on the tokenization of an asset, i.e., the creation of a digital analogue of an asset (token) with the aim of buying or selling it in the digital market. Every market asset can be presented as a token, and the transaction via Blockchain guarantees the security and protection of digital resources.
According to the analysis by Howell et al. (2018) entitled “Initial Coin Offerings: Financing Growth with Cryptocurrency Token Sales,” the three main forms of investment attraction through tokenization and Blockchain technology are ICO, IEO, and STO.
The ICO (Initial Coin Offering) is a form of crowdfunding through the use of cryptocurrencies. Investment attraction occurs in the form of selling a fixed number of new units of cryptocurrencies or tokens to investors (Bank of Russia 2017). The advantage for investors lies in the potential profit they can obtain if the project is successfully implemented. However, due to the underdevelopment of the legal framework regarding ICOs, the risk for the investor is that the project cannot be implemented conveniently.
STO (Security Token Offering) is an investment system for blockchain projects in the form of issuing digital assets. As a form of digital investment, STO is used in jurisdictions where the circulation of digital financial assets is equated with investments in securities. STO investors are exclusively professional investment institutions (accredited) in the financial market.
IEO (Initial Exchange Offering) or initial exchange offer is an innovative form of investment attraction in which the token offer is made through a digital investment platform or crypto-exchange. Unlike ICO, where cryptocurrency issuers address investors directly, IEO issuers attract an institutional commercial organizer to position the tokens.
Blockchain is a promising catalyst for achieving global sustainable development goals and can be applied in many sectors of the economy in the future. The United Nations Agenda 2030 emphasizes the role that innovation plays in supporting sustainable development. In this framework, Blockchain technology is one of the emerging innovations with a strategic lever function to support the implementation and monitoring of SDGs.
However, the results of the OECD Digital Government Index for 2019 make it clear that governments should increase the strategic use of technology in public sector organizations. According to Deloitte’s analysis, Public-Private Partnerships are precisely the acceleration in the complete adoption of Blockchain in public entities in order to expand access to physical and digital infrastructure for storing large volumes of data.
In the international landscape, the Italian case stands out for a recent growth in interest in the possibilities that Blockchain offers. An example of this is the initiative of the Ministry of Economic Development aimed at developing Public-Private Partnerships and regulations that make it possible to adopt technologies based on distributed ledgers, in particular Blockchain. Consequently, the Italian strategy for Blockchain and DLTs includes the use of PPP “both in research activities and in dissemination and training activities (…).”
Therefore, the importance of technological innovation in processes and services is becoming increasingly clear, and the future looks promising. It will be interesting to observe the outcome of Public-Private Partnerships starting from the opening of incubation centers or hackathons where start-ups can collaborate with public entities and build new systems based on Blockchain.
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