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Privatization and the Role of Sub-National Governments in the Latin American Power Sector: A Plea for Less Subsidiarity?

Author

Listed:
  • Elkhan Richard Sadik-Zada

    (Institute of Development Research and Development Policy, Ruhr-Universit t Bochum, Germany)

  • Wilhelm L wenstein

    (Institute of Development Research and Development Policy, Ruhr-Universit t Bochum, Germany)

  • Mattia Ferrari

    (Institute of Development Research and Development Policy, Ruhr-Universit t Bochum, Germany)

Abstract

In this paper, we explore the cross-national impact of privatization in the network industries on the access to network services. We focus on the assessment of the electricity sector in 20 Latin American countries and analyze the time series between 1985 and 2010. To control for the relevance of the subsidiarity (social commons) argument (Byrne and Mun, 2001; 2003) we assess the interaction between commodification and the role of the sub-national governments in the power sector. Privatization has a statistically significant positive effect on the level of electricity access. In the absence of federalism, privatization in the electricity sector has a greater impact on electrification than in the case with federalist government system. Federalism has a positive impact on the electricity access if electricity is generated and supplied mainly by the state-owned enterprises. Another interesting finding is the relationship between the degree of subsidiarity and electrification: A higher the degree of subsidiarity has a negative effect on the electrification. This could be a result of the increasing transaction costs and rent-seeking behavior in the decentralized settings. The study complements the existing literature by analyzing the privatization reform from the subsidiarity perspective.

Suggested Citation

  • Elkhan Richard Sadik-Zada & Wilhelm L wenstein & Mattia Ferrari, 2018. "Privatization and the Role of Sub-National Governments in the Latin American Power Sector: A Plea for Less Subsidiarity?," International Journal of Energy Economics and Policy, International Journal of Energy Economics and Policy, vol. 8(1), pages 95-103.
    • Handle: RePEc:eco:journ2:2018-01-12
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    References listed on IDEAS

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    1. repec:idb:brikps:59818 is not listed on IDEAS
    2. K. Arin & Mehmet Ulubaşoğlu, 2009. "Leviathan resists: the endogenous relationship between privatization and firm performance," Public Choice, Springer, vol. 140(1), pages 185-204, July.
    3. 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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    5. Foster, Vivien & Guasch, José Luis & Andrés, Luis & Haven, Thomas, 2008. "The Impact of Private Sector Participation in Infrastructure: Lights, Shadows, and the Road Ahead," IDB Publications (Books), Inter-American Development Bank, number 358.
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    More about this item

    Keywords

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    JEL classification:

    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General
    • E02 - Macroeconomics and Monetary Economics - - General - - - Institutions and the Macroeconomy
    • H13 - Public Economics - - Structure and Scope of Government - - - Economics of Eminent Domain; Expropriation; Nationalization
    • H40 - Public Economics - - Publicly Provided Goods - - - General
    • H70 - Public Economics - - State and Local Government; Intergovernmental Relations - - - General
    • L33 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Comparison of Public and Private Enterprise and Nonprofit Institutions; Privatization; Contracting Out
    • L43 - Industrial Organization - - Antitrust Issues and Policies - - - Legal Monopolies and Regulation or Deregulation
    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities

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