External Factors ( Or External Environment )

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Case Study External Factors (or External Environment) During the 1970s and 1980s, the Republic of Korea achieved exceptional economic development. However, the government focused on regional development rather than infrastructure development (Hine & Chelliah, 2009). Therefore, the rate of infrastructure investment had been decreasing in the 1980s in particular, which drove a lot of traffic bottlenecks in many regions, and high traffic congestion costs in roads, railways, and seaports. At the beginning of the 1990s, the government acknowledged the limits to fund the needed construction of infrastructure facilities and felt the need to mobilize new sources to invest infrastructure (Kim et al., 2011). To promote the PPP program as a new…show more content…
The government modified this law again in January 2005. The revised Act established a specialized agency (“Public-Private Infrastructure Investment Management Center”) to provide technical assistance to the Ministry of Strategy and Finance and procuring authorities. Also, the MRG was amended due to excessive demand. In October 2009, the MRG program ended, and was replaced by the support measurement of compensation of base cost, under which the government shares investment risks within the limit of the government’s cost, if the project was conducted as a public project. Therefore, the changes in toll road PPP projects characteristics can be divided as shown in Table 2 (Hine & Chelliah, 2009; Kim et al., 2011). Current Status of PPP highways The first PPP highway is the Incheon International Airport Expressway completed in November 2000. As of 2015, there are 24 PPP highways in Korea, and 10 of them are operating, 8 projects are under construction, 3 of them are in the planning stage and the remaining 3 projects are under discussion. The total investment cost for 24 routes is 41.2 trillion won. The ratio of PPP highways continuously increased after 2000, and the PPP highways account for 11% (460km) of the total Korean national highways (4,139km) as of 2015. On the other hand, the PPP projects were developed as solicited PPP projects, but since 2005, projects were in progress by unsolicited projects. The Problem of Risk Sharing: Minimum Revenue
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