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2.1. The concept of public-private partnership and high-tech innovation
PPP generally refers to a long-term cooperative arrangement between the public
and private sectors for the provision of public goods, services, or investment projects,
with risks, responsibilities, and benefits distributed through contractual or quasi-
contractual arrangements (World Bank, 2017). PPP has traditionally been associated with
infrastructure sectors that require large capital investment and long payback periods,
such as highways, power generation, water supply, and urban utilities. In such contexts,
PPP is used to mobilize private finance and managerial expertise in support of public
objectives.
Over time, however, the scope of PPP has expanded beyond infrastructure into
broader development policy, including science, technology, and innovation. In innovation-
driven economies, governments increasingly use PPP not only to finance physical assets
but also to stimulate research, facilitate commercialization, build strategic technology
platforms, and connect public research organizations with firms and investors (OECD,
2019). Within this broader understanding, PPP can be viewed as part of a governance
approach that links the State, enterprises, and research institutions in support of
collective innovation outcomes.
High-tech innovation refers to the development or significant improvement of
products, processes, and services based on advanced technologies in frontier sectors such
as information technology, artificial intelligence, biotechnology, automation,
semiconductors, and new materials. These activities differ from conventional investment
because they involve greater uncertainty, long research cycles, high upfront costs, and
uncertain commercial returns. The output of innovation is often intangible and may take
the form of software, patents, prototypes, data, or knowledge platforms rather than
directly saleable assets.
These characteristics create a strong justification for public intervention. According
to market failure theory, private investment in R&D tends to fall below the socially
optimal level because innovation produces spillover benefits that firms cannot fully
appropriate (Arrow, 1962). Since knowledge diffusion, learning effects, and wider
productivity gains extend beyond the individual investor, private firms may underinvest,
especially in early-stage or high-risk technologies. Government action is therefore needed
to reduce uncertainty, coordinate actors, and encourage long-term investment in areas of
strategic public value.
Within this framework, PPP becomes especially relevant because it provides a
mechanism through which the State and private actors can jointly address financing, risk-
sharing, and commercialization challenges. Rather than substituting for private initiative,
the State can use PPP to structure cooperation, create incentives, and align innovation
activities with broader economic and developmental objectives (Phan The Cong, 2025).
2.2. The role of public-private partnership in innovation
The literature identifies several major roles for PPP in national innovation systems.
First, PPP enables the combination of complementary resources. The public sector
can contribute strategic direction, funding support, infrastructure, regulatory authority,
and long-term policy commitment. The private sector contributes technology, managerial
capability, market knowledge, entrepreneurial agility, and commercialization capacity. By
combining these assets, PPP can increase the feasibility of projects that are too risky,
expensive, or complex for either sector alone (Ablaev & Akhmetshina, 2016). This is

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