Do regulation and institutional design matter for infrastructure sector performance ?
AbstractThis paper evaluates the impact of economic regulation on infrastructure sector outcomes. It tests the impact of regulation from three different angles: aligning costs with tariffs and firm profitability; reducing opportunistic renegotiation; and measuring the effects on productivity, quality of service, coverage, and prices. The analysis uses an extensive data set of about 1,000 infrastructure concessions granted in Latin America from the late 1980s to the early 2000s. The analysis finds that as the theory indicates, regulation matters. The empirical work here reported shows that in three relevant economic aspects-aligning costsand tariffs; dissuading renegotiations; and improving productivity, quality of service, coverage, and tariffs-the structure, institutions, and procedures of regulation matter. Thus, significant efforts should continue to be made to improve the structure, quality, and institutionality of regulation. Regulation matters for protecting both consumers and investors, for aligning closely financial returns and the costs of capital, and for capturing higher levels of benefits from the provision of infrastructure services by the private sector.
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Bibliographic InfoPaper provided by The World Bank in its series Policy Research Working Paper Series with number 4378.
Date of creation: 01 Oct 2007
Date of revision:
Emerging Markets; Debt Markets; Private Participation in Infrastructure; Infrastructure Economics; Infrastructure Regulation;
This paper has been announced in the following NEP Reports:
- NEP-ALL-2007-10-27 (All new papers)
- NEP-EFF-2007-10-27 (Efficiency & Productivity)
- NEP-REG-2007-10-27 (Regulation)
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- Eric Manes, 2009. "Pakistan's Investment Climate : Laying the Foundation for Growth, Volume 2. Annexes," World Bank Other Operational Studies 12411, The World Bank.
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