The impact of privatization on the performance of the infrastructure sector : the case of electricity distribution in Latin American countries
AbstractThe authors analyze the impact of privatization on the performance of 116 electric utilities in 10 Latin American countries. The analysis makes a number of contributions to the literature on changes in infrastructure ownership. First, this is the first systemic analysis of the impact of privatization on the distribution of the electricity sector. Second, it constructs an unbalanced panel data set of key indicators for each country. Third, it includes a broader-than in past studies-range of indicators, such as output, employment, productivity, efficiency, quality, coverage, and prices, offering a fuller picture of the effects of privatization on consumers. Fourth, this research covers a longer period of time, and evaluates three stages-before, transition, and after-allowing for the identification of the short- and long-run effects of privatization, as opposed to previous analyses'short time series data that do not identify long-run outcomes. Finally, the counterfactual is considered through the analysis in trends. The authors apply two different methodologies. The first methodology uses means and medians from each period and tests the significance of the changes between periods. The second methodology consists of an econometric model that captures firm fixed effects, firm-specific time trends, and heteroscedasticity corrections. When needed, the authorsused firm-specific time trends to better understand the outcomes. The results suggest that changes in ownership generate significant improvements in labor productivity, efficiency, and product and service quality, and that most of those changes occur in the transition period. Improvements in the post transition period-beyond two years after the change in ownership-are much more modest.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by The World Bank in its series Policy Research Working Paper Series with number 3936.
Date of creation: 01 Jun 2006
Date of revision:
Economic Theory&Research; Energy Production and Transportation; Public Sector Economics&Finance; Labor Markets; Science Education;
This paper has been announced in the following NEP Reports:
- NEP-ALL-2006-06-10 (All new papers)
- NEP-COM-2006-06-10 (Industrial Competition)
- NEP-EFF-2006-06-10 (Efficiency & Productivity)
- NEP-ENE-2006-06-10 (Energy Economics)
- NEP-LAM-2006-06-10 (Central & South America)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Jeffry M. Netter & William L. Megginson, 2001. "From State to Market: A Survey of Empirical Studies on Privatization," Journal of Economic Literature, American Economic Association, vol. 39(2), pages 321-389, June.
- 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.
- Sebastian Galiani & Paul Gertler & Ernesto Schargrodsky, 2002. "Water for Life: The Impact of the Privatization of Water Services on Child Mortality," Working Papers 54, Universidad de San Andres, Departamento de Economia, revised Sep 2005.
- Chisari, Omar & Estache, Antonio & Romero, Carlos, 1997.
"Winners and losers from utility privatization in Argentina : lessons from a general equilibrium model,"
Policy Research Working Paper Series
1824, The World Bank.
- Chisari, Omar & Estache, Antonio & Romero, Carlos, 1999. "Winners and Losers from Utility Privatization in Argentina. Lessons from a General Equilibrium Model," UADE Working Papers 3_1999, Instituto de Economía, Universidad Argentina de la Empresa.
- Roman Frydman & Cheryl Gray & Marek Hessel & Andrzej Rapaczynski, 1999. "When Does Privatization Work? The Impact Of Private Ownership On Corporate Performance In The Transition Economies," The Quarterly Journal of Economics, MIT Press, vol. 114(4), pages 1153-1191, November.
- Boardman, Anthony E & Vining, Aidan R, 1989. "Ownership and Performance in Competitive Environments: A Comparison of the Performance of Private, Mixed, and State-Owned Enterprises," Journal of Law and Economics, University of Chicago Press, vol. 32(1), pages 1-33, April.
- Estache, Antonio & Rossi, Martin, 2004. "Have consumers benefited from the reforms in the electricity distribution sector in Latin America?," Policy Research Working Paper Series 3420, The World Bank.
- Antonio Estache & Marco Manacorda & Tommaso M. Valletti, 2002.
"Telecommunications Reform, Access Regulation, and Internet Adoption in Latin America,"
JOURNAL OF LACEA ECONOMIA,
LACEA - LATIN AMERICAN AND CARIBBEAN ECONOMIC ASSOCIATION.
- Estache, Antonio & Manacorda, Marco & Valletti, Tommaso M., 2002. "Telecommunication reforms, access regulation, and Internet adoption in Latin America," Policy Research Working Paper Series 2802, The World Bank.
- Rafael La Porta & Florencio López-De-Silanes, 1999.
"The Benefits Of Privatization: Evidence From Mexico,"
The Quarterly Journal of Economics,
MIT Press, vol. 114(4), pages 1193-1242, November.
- Rafael La Porta & Florencio López-de-Silanes, 1997. "The Benefits of Privatization : Evidence from Mexico," World Bank Other Operational Studies 11583, The World Bank.
- Rafael La Porta & Florencio Lopez-de-Silane, 1997. "The Benefits of Privatization: Evidence from Mexico," NBER Working Papers 6215, National Bureau of Economic Research, Inc.
- Chong, Alberto & Lopez-de-Silanes, Florencio, 2002.
"Privatization and labor force restructuring around the world,"
Policy Research Working Paper Series
2884, The World Bank.
- Alberto Chong & Florencio Lopez-de-Silanes, 2003. "Privatization and Labor Force Restructuring Around the World," Research Department Publications 4329, Inter-American Development Bank, Research Department.
- Alberto E. Chong & Florencio López-de-Silanes, 2003. "Privatization and Labor Force Restructuring around the World," IDB Publications 6507, Inter-American Development Bank.
- Saal, David S & Parker, David, 2001. "Productivity and Price Performance in the Privatized Water and Sewerage Companies of England and Wales," Journal of Regulatory Economics, Springer, vol. 20(1), pages 61-90, July.
- Alberto Chong & Florencio de, 2003.
"The Truth about Privatization in Latin America,"
Yale School of Management Working Papers
ysm436, Yale School of Management.
- Ehrlich, Isaac & Georges Gallais-Hamonno & Zhiqiang Liu & Randall Lutter, 1994. "Productivity Growth and Firm Ownership: An Analytical and Empirical Investigation," Journal of Political Economy, University of Chicago Press, vol. 102(5), pages 1006-38, October.
- Wallsten, Scott, 2002. "Does sequencing matter? regulation and privatization in telecommunications reforms," Policy Research Working Paper Series 2817, The World Bank.
- Manuel Dussan, 1996. "Electric Power Sector Reform in Latin America and the Caribbean," IDB Publications 46878, Inter-American Development Bank.
- Estache, Antonio & Rodriguez-Pardina, Martin, 1999. "Light and lightning at the end of the public tunnel : reform of the electricity sector in the Southern Cone," Policy Research Working Paper Series 2074, The World Bank.
- Ros, Agustin J. & Banerjee, Aniruddha, 2000. "Telecommunications privatization and tariff rebalancing: evidence from Latin America," Telecommunications Policy, Elsevier, vol. 24(3), pages 233-252, April.
- Ros, Agustin J, 1999. "Does Ownership or Competition Matter? The Effects of Telecommunications Reform on Network Expansion and Efficiency," Journal of Regulatory Economics, Springer, vol. 15(1), pages 65-92, January.
- Paul L. Joskow, 2003.
"Electricity Sector Restructuring And Competition - Lessons Learned,"
0314, Massachusetts Institute of Technology, Center for Energy and Environmental Policy Research.
- Paul Joskow, 2003. "Electricity Sector Restructuring and Competition: Lessons Learned," Latin American Journal of Economics-formerly Cuadernos de Economía, Instituto de Economía. Pontificia Universidad Católica de Chile., vol. 40(121), pages 548-558.
- Wallsten, Scott J, 2001. "An Econometric Analysis of Telecom Competition, Privatization, and Regulation in Africa and Latin America," Journal of Industrial Economics, Wiley Blackwell, vol. 49(1), pages 1-19, March.
- Megginson, William L & Nash, Robert C & van Randenborgh, Matthias, 1994. " The Financial and Operating Performance of Newly Privatized Firms: An International Empirical Analysis," Journal of Finance, American Finance Association, vol. 49(2), pages 403-52, June.
- Heckman, James J. & Robb, Richard Jr., 1985. "Alternative methods for evaluating the impact of interventions : An overview," Journal of Econometrics, Elsevier, vol. 30(1-2), pages 239-267.
- Auriol, Emmanuelle & Blanc, Aymeric, 2008.
"Capture and Corruption in Public Utilities: the Cases of Water and Electricity in Sub-Saharan Africa,"
IDEI Working Papers
505, Institut d'Économie Industrielle (IDEI), Toulouse.
- Auriol, Emmanuelle & Blanc, Aymeric, 2009. "Capture and corruption in public utilities: The cases of water and electricity in Sub-Saharan Africa," Utilities Policy, Elsevier, vol. 17(2), pages 203-216, June.
- Antonio Estache & Martin A. Rossi, 2009.
"Regulatory Agencies: Impact on Firm Performance and Social Welfare,"
Working Papers ECARES
2009_010, ULB -- Universite Libre de Bruxelles.
- Estache, Antonio & Rossi, Martin A., 2008. "Regulatory agencies : impact on firm performance and social welfare," Policy Research Working Paper Series 4509, The World Bank.
- Riham Shendy & Zachary Kaplan & Peter Mousley, 2011. "Toward Better Infrastructure : Conditions, Constraints, and Opportunities in Financing Public-Private Partnerships in Select African Countries," World Bank Publications, The World Bank, number 2331, October.
- Eduardo Martínez Chombo, 2009. "Sources of Over-Costs and Distortions in State-Owned Utilities in Mexico," Working Papers 2009-07, Banco de México.
- Daniel Chiquiar & Manuel Ramos Francia, 2009. "Competitiveness and Growth of the Mexican Economy," Working Papers 2009-11, Banco de México.
- Andres, Luis & Guasch, Jose Luis & Azumendi, Sebastian Lopez, 2008. "Regulatory governance and sector performance : methodology and evaluation for Electricity distribution in Latin America," Policy Research Working Paper Series 4494, The World Bank.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Roula I. Yazigi).
If references are entirely missing, you can add them using this form.