Urban Economics and Planning

Urban Economics and Planning

Examining the Barriers to Private Sector Participation in Khorramabad Municipal Projects

Document Type : Original Article

Authors
Mostafa Shokri 1
Mostafa Elmimoghaddam 2
1 Assistant Professor, Department of Economics, Faculty of Management and Economics, Lorestan University, Khorramabad, Iran
2 Assistant Professor of Economics, Payame Noor University, Tehran, Iran
10.22034/uep.2025.495797.1575
Abstract
Introduction 
As a non-governmental public institution, the municipality has various duties, the most important of which is to meet the needs and demands of citizens and ensure their welfare and comfort. The wide range of duties of the municipality towards citizens and the increasing needs and expectations of citizens from the municipality have caused municipalities to face numerous problems in various fields in the process of managing urban development and providing the services needed by citizens, one of the most important of which is the lack of sustainability of income sources. In recent years, municipalities have shifted from a task-oriented approach to a market-oriented, customer-oriented, and participatory approach in economic activities through partnerships with private sector investors in the construction of collaborative projects to achieve sustainable income. Even though the Khorramabad Municipality has defined different platforms in the form of various projects in order to attract private sector capital for the implementation of various infrastructure projects, it has not been very successful in attracting private sector investors.
Without a doubt, the first step towards developing private sector participation is to identify the reasons for reluctance, evaluate effective obstacles, and explain the obstacles to this sector’s participation in urban projects so that by removing existing obstacles, the grounds for their participation can be prepared more than before. Given the importance of this issue in the development and construction of the city of Khorramabad, in the present study, the factors affecting the reluctance of the private sector to participate in public and private partnership projects of the Khorramabad Municipality have been identified and ranked using the opinions of a group of experts.
Materials and Methods
The aim of the present study is to explain and prioritize these types of barriers to private sector participation and investment in Khorramabad municipality projects. For this purpose, the present study is a survey in terms of its applied purpose and in terms of the method of data collection and collection. In this study, in order to achieve the main goal of determining the priority of barriers to private sector participation in Khorramabad municipality projects, a measurement tool has been used to observe quantitative variables. In order to analyze the impact of effective factors on barriers to private sector investor participation in the development and construction of Khorramabad city, the simultaneous structural equation model was used, and field data was also collected through a questionnaire with closed answers and based on a five-point Likert scale from the statistical population of the study, including university professors related to urban management, experts, urban managers and investors related to Khorramabad municipality.
The research tool consisted of a researcher-made questionnaire whose validity and reliability were examined and confirmed by asking university professors and experts (face validity and reliability) and by using the convergence analysis method. Composite reliability coefficients and Cronbach’s alpha were used to measure reliability, and if these coefficients are appropriate, it can be said that the research tool is reliable.
Findings
In the present study, the variables of regulation and policy-making, expert studies, project preparation, and referral process, financing and financial support, and capacity building and promotion of knowledge and skills in the public and private sectors were confirmed as determining obstacles to private sector participation in urban development and construction activities of Khorramabad Municipality. The findings showed that among these, the role of the financing-financial support factor was superior to other obstacles and had a stronger effect. This important point indicates that the components of the financing-financial support factor, such as the lack of effective financial support, the incompatibility of the conditions for granting commercial banks’ facilities with the structure of Khorramabad Municipality’s participatory projects, the lack of sufficient use of capital market capacities in financing partnership contracts, the lack of financial resources to provide free or mandatory facilities, and the lack of sustainable financial resources to create support, have caused the lack of appropriate participation of the private sector in urban development and construction activities of Khorramabad City. In other words, due to the lack of proper and long-term forecasting in financing and financial support for the private sector in urban development and construction discussions, the private sector does not see the benefit of unilateral entry without the participation of the banking network due to economic inefficiency and prefers to invest its capital in fields that have a more definite future.
Conclusion
According to the results obtained, it can be said that the main reason for the private sector to participate in urban development and construction projects is certainly capital turnover and appropriate profitability, which, in many cases, including in the current conditions of the country (which is affected by high inflation expectations in society, exchange rate instability, sanctions and as a result increased investment risk, etc.), is directly related to the existence of banking network incentives for investors. Therefore, it is suggested that in order to improve the participation of private companies in the urban development and construction of Khorramabad, targeted facilities be considered for investors so that the investor, by integrating his initial contribution and banking network facilities, has more motivation for development activities in the city of Khorramabad.
Keywords
Development projects
Khorramabad Municipality
Partnership
Private Sector

Subjects

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Urban Economics and Planning
Volume 5, Issue 4
Winter 2025
Pages 140-151

  • Receive Date 27 December 2024
  • Revise Date 17 January 2025
  • Accept Date 19 January 2025