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The Effects of Privatization on Firms and on Social Welfare: The Chilean Case

Author

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  • Rodrigo Gutierrez
  • Pablo Serra
  • Ronald Fischer

Abstract

Chile led the Latin American pack in launching its far-reaching privatization program, but the question of whether the process has made firms more profitable remains. Also unclear is whether society as a whole is better off because of privatization. This paper looks at the performance of several industries to gauge the effects of privatization on Chilean firms and social welfare. The authors’ research, which is both broad and deep, yields some surprising findings. For example, contrary to commonly-held perceptions of bloated state-run bureaucracies, the authors find that the employment ranks of regulated entities actually swelled after their ownership switched to private hands. The paper evaluates a wide range of aspects of the privatization process, from highway tolls to private pension fund returns to school vouchers, and concludes with some concrete recommendations for future improvements.

Suggested Citation

  • Rodrigo Gutierrez & Pablo Serra & Ronald Fischer, 2003. "The Effects of Privatization on Firms and on Social Welfare: The Chilean Case," Research Department Publications 3150, Inter-American Development Bank, Research Department.
  • Handle: RePEc:idb:wpaper:3150
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Alberto Chong & Florencio de, 2003. "The Truth about Privatization in Latin America," Yale School of Management Working Papers ysm436, Yale School of Management.
    2. Komendantova, Nadejda & Patt, Anthony & Barras, Lucile & Battaglini, Antonella, 2012. "Perception of risks in renewable energy projects: The case of concentrated solar power in North Africa," Energy Policy, Elsevier, vol. 40(C), pages 103-109.
    3. Jamasb, Tooraj, 2006. "Between the state and market: Electricity sector reform in developing countries," Utilities Policy, Elsevier, vol. 14(1), pages 14-30, March.
    4. Rocha, Katia & Camacho, Fernando & Braganca, Gabriel, 2007. "Return on capital of Brazilian electricity distributors: A comparative analysis," Energy Policy, Elsevier, vol. 35(4), pages 2526-2537, April.
    5. Tooraj Jamasb & Rabindra Nepal & Govinda R. Timilsina, 2017. "A Quarter Century Effort Yet to Come of Age: A Survey of Electricity Sector Reform in Developing Countries," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3).
    6. M. Pollitt, 2004. "Electricity reform in Chile. Lessons for developing countries," Competition and Regulation in Network Industries, Intersentia, vol. 5(3), pages 221-263, September.
    7. , Aisdl, 2017. "Privatization of Vietnam Airlines: a successful reform or a timid policy step," OSF Preprints wknfq, Center for Open Science.
    8. Martinez-Gutierrez, María Soledad & Cuadrado, Cristóbal, 2017. "Health policy in the concertación era (1990–2010): Reforms the chilean way," Social Science & Medicine, Elsevier, vol. 182(C), pages 117-126.
    9. Carlos Pombo & Manuel Ramirez, 2002. "Privatization in Colombia: a plant performance analysis," Borradores de Investigación 3377, Universidad del Rosario.
    10. Mai, Nhat Chi, 2022. "Privatization of Vietnam Airlines: A successful Reform or A Timid Policy Step," OSF Preprints duwym, Center for Open Science.
    11. John Nellis, 2006. "Privatization: A Summary Assessment," Working Papers 87, Center for Global Development.
    12. Emma Aguila & Michael D. Hurd & Susann Rohwedder, 2008. "Pension Reform in Mexico: The Evolution of Pension Fund Management Fees and their Effect on Pension Balances," Working Papers wp196, University of Michigan, Michigan Retirement Research Center.
    13. Tooraj Jamasb & Rabindra Nepal & Govinda Timilsina & Michael Toman, 2014. "Energy Sector Reform, Economic Efficiency and Poverty Reduction," Discussion Papers Series 529, School of Economics, University of Queensland, Australia.
    14. Jamasb,Tooraj & Nepal,Rabindra & Timilsina,Govinda R., 2015. "A quarter century effort yet to come of age : a survey of power sector reforms in developing countries," Policy Research Working Paper Series 7330, The World Bank.
    15. Zhang, Yinfang & Parker, David & Kirkpatrick, Colin, 2005. "Competition, regulation and privatisation of electricity generation in developing countries: does the sequencing of the reforms matter?," The Quarterly Review of Economics and Finance, Elsevier, vol. 45(2-3), pages 358-379, May.

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