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Privatization in Latin America

Author

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  • John Nellis
Abstract
In Latin America, privatization started earlier and spread farther and more rapidly than in almost any other part of the world. More, and larger, firms were sold, and more proceeds were raised. Despite positive microeconomic results, privatization is highly and increasingly unpopular in the region. The core social criticism is that privatization contributes to growing poverty and inequality levels in Latin America—and circumstantial evidence supports the claim. But recent and rigorous studies dilute or counter the negative views, concluding that privatization has contributed only slightly to rising unemployment and in equality, and either reduces poverty or has no effect on it. Still, while privatization may be winning the economic battle it is losing the political war: The benefits are spread widely, small for each affected consumer or taxpayer, and occur (or accrue) in the medium-term. In contrast, the costs are large for those concerned, who tend to be visible, vocal, urban and organized, a potent political combination.

Suggested Citation

  • John Nellis, 2003. "Privatization in Latin America," Working Papers 31, Center for Global Development.
    • Handle: RePEc:cgd:wpaper:31
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    File URL: http://www.cgdev.org/content/publications/detail/2759
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    References listed on IDEAS

    as
    1. Chong, Alberto & Lopez-de-Silanes, Florencio, 2002. "Privatization and labor force restructuring around the world," Policy Research Working Paper Series 2884, The World Bank.
    2. Ricardo D. Paredes, 2001. "Redistributive Impact of Privatization and the Regulation of Utilities in Chile," WIDER Working Paper Series DP2001-19, World Institute for Development Economic Research (UNU-WIDER).
    3. J. Luis Guasch & Jean-Jacques Laffont & Stephane Straub, 2003. "Renegotiation of Concession Contracts in Latin America," Edinburgh School of Economics Discussion Paper Series 103, Edinburgh School of Economics, University of Edinburgh.
    4. David McKenzie & Dilip Mookherjee, 2003. "The Distributive Impact of Privatization in Latin America: Evidence from Four Countries," Economía Journal, The Latin American and Caribbean Economic Association - LACEA, vol. 0(Spring 20), pages 161-234, January.
    5. Sebastian Galiani & Paul Gertler & Ernesto Schargrodsky, 2005. "Water for Life: The Impact of the Privatization of Water Services on Child Mortality," Journal of Political Economy, University of Chicago Press, vol. 113(1), pages 83-120, February.
    6. Eduardo Lora & Ugo Panizza, 2002. "Structural Reforms in Latin America under Scrutiny," Research Department Publications 4301, Inter-American Development Bank, Research Department.
    7. Gover Barja & Miguel Urquiola, 2003. "Capitalization, regulation and the poor: access to basic services in Bolivia," Chapters, in: Cecilia Ugaz (ed.), Utility Privatization and Regulation, chapter 9, Edward Elgar Publishing.
    8. Dani Rodrik & Arvind Subramanian & Francesco Trebbi, 2004. "Institutions Rule: The Primacy of Institutions Over Geography and Integration in Economic Development," Journal of Economic Growth, Springer, vol. 9(2), pages 131-165, June.
    9. Rafael La Porta & Florencio López-de-Silanes, 1999. "The Benefits of Privatization: Evidence from Mexico," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 114(4), pages 1193-1242.
    10. Kuczynski, Pedro-Pablo & John Williamson (ed.), 2003. "After the Washington Consensus: Restarting Growth and Reform in Latin America," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 350, April.
    11. Antonio Estache & V. Foster & Q. Wodon, 2002. "Accounting for Poverty in Infrastructure Reform: Learning from Latin America's Experience," ULB Institutional Repository 2013/44108, ULB -- Universite Libre de Bruxelles.
    12. Máximo Torero & Alberto Pascó-Font, 2003. "The social impact of privatization and the regulation of utilities in Peru," Chapters, in: Cecilia Ugaz (ed.), Utility Privatization and Regulation, chapter 11, Edward Elgar Publishing.
    13. Osama J. A. R. Abu Shair, 1997. "Privatization and Development," Palgrave Macmillan Books, Palgrave Macmillan, number 978-1-349-25374-6, October.
    14. Ramamurti, Ravi, 1997. "Testing the limits of privatization: Argentine railroads," World Development, Elsevier, vol. 25(12), pages 1973-1993, December.
    15. Joseph Stiglitz, 1999. "Quis Custodiet Ipsos Custodes?," Challenge, Taylor & Francis Journals, vol. 42(6), pages 26-67, November.
    Full references (including those not matched with items on IDEAS)

    Citations

    RePEc Biblio mentions

    As found on the RePEc Biblio, the curated bibliography for Economics:
    1. > Political Economy > The Political Economy of Latin America

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    Cited by:

    1. Daniele CHECCHI & Massimo FLORIO & Jorge CARRERA, 2004. "Privatization discontent and its determinants: evidence from Latin America," Departmental Working Papers 2004-23, Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano.
    2. Sirtaine, Sophie & Pinglo, Maria Elena & Guasch, J. Luis & Foster, Vivien, 2005. "How profitable are private infrastructure concessions in Latin America?: Empirical evidence and regulatory implications," The Quarterly Review of Economics and Finance, Elsevier, vol. 45(2-3), pages 380-402, May.
    3. John Nellis, 2006. "Privatization: A Summary Assessment," Working Papers 87, Center for Global Development.
    4. Luis A. Andrés & J. Luis Guasch & Thomas Haven & Vivien Foster, 2008. "The Impact of Private Sector Participation in Infrastructure : Lights, Shadows, and the Road Ahead," World Bank Publications - Books, The World Bank Group, number 6545.
    5. Fatma Dogruel & Suut Dogruel, 2011. "Privatization and regional distribution of manufacturing in Turkey," Working Papers 2011/4, Turkish Economic Association.
    6. Operations Evaluation Department, 2005. "2004 Annual Review of Development Effectiveness : The World Bank's Contributions to Poverty Reduction," World Bank Publications - Books, The World Bank Group, number 7433.
    7. repec:idb:brikps:358 is not listed on IDEAS
    8. Kikeri, Sunita & Kolo, Aishetu, 2005. "Privatization : trends and recent developments," Policy Research Working Paper Series 3765, The World Bank.
    9. Noemí Peña-Miguel & Beatriz Cuadrado-Ballesteros, 2021. "Effect of privatisation on income inequality: a European analysis," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 48(3), pages 697-716, August.
    10. Vivien Foster & José Luis Guasch & Luis Andrés & Thomas Haven, 2008. "The Impact of Private Sector Participation in Infrastructure: Lights, Shadows, and the Road Ahead," IDB Publications (Books), Inter-American Development Bank, number 59818, February.

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    More about this item

    Keywords

    Latin America; privatization; poverty; inequality;
    All these keywords.

    JEL classification:

    • O54 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Latin America; Caribbean
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement

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