How to Harness the Positive Potential of KKN

This article argues that the two prevailing perspectives that explain private sector participation in infrastructure in developing countries – new institutional economics and the rent-seeking approach – cannot account for the evident variations within and across sectors in a given country. This study uses two cases from Indonesia's attempt to promote private investment in toll road construction to demonstrate that a firm-level analysis is adequate to the task. In particular, the specific incentive structure that a rent-seeker faces may explain whether positive or negative rent will be facilitated.