IDEAS home Printed from https://ideas.repec.org/a/eee/wodepe/v31y2023ics2452292923000437.html
   My bibliography  Save this article

State ownership in liberal economic governance? De-risking private investment in the electricity sector in Mexico

Author

Listed:
  • Valenzuela, Jose Maria

Abstract

Abandoning some neoliberal reform tools, but not the goals, liberal policymakers have devised forms of economic governance to support private investment through, paradoxically, the use of state-owned enterprises (SOEs). The article builds on a pragmatist perspective of institutional evolution by describing the syncretism in Mexico's 2013 electricity reform as an exemplary case of structural reforms for de-risking investment through the strategic use of the national SOE. The case shows that the technical and legal segmentation of electricity supply can accommodate different risk distribution arrangements in which state ownership is useful to (1) rein-in the capacity of the dominant company to exercise market power, (2) shoulder the costs of maintaining a subsidised tariff structure for retail consumers, and (3) underwrite the expansion of infrastructure with an uncertain economic future. Structural reforms can use SOEs to relocate private risk in the state's ledger and making state de-risking the most important mechanisms to drive investment, and not market competition. The article argues for the need to develop a sector-specific understanding the role of SOEs within liberal economic programs, but also the need to develop a critical perspective, for instance, through Daniela Gabor's Wall Street Consensus concept, to focus on the historical distributional consequences of these arrangements which can result in the progressive private control over the electricity sector.

Suggested Citation

  • Valenzuela, Jose Maria, 2023. "State ownership in liberal economic governance? De-risking private investment in the electricity sector in Mexico," World Development Perspectives, Elsevier, vol. 31(C).
    • Handle: RePEc:eee:wodepe:v:31:y:2023:i:c:s2452292923000437
    DOI: 10.1016/j.wdp.2023.100527
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S2452292923000437
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.wdp.2023.100527?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Frank A. Wolak, 2014. "Regulating Competition in Wholesale Electricity Supply," NBER Chapters, in: Economic Regulation and Its Reform: What Have We Learned?, pages 195-289, National Bureau of Economic Research, Inc.
    2. Daniela Gabor, 2021. "The Wall Street Consensus," Development and Change, International Institute of Social Studies, vol. 52(3), pages 429-459, May.
    3. Gencer, Busra & Larsen, Erik Reimer & van Ackere, Ann, 2020. "Understanding the coevolution of electricity markets and regulation," Energy Policy, Elsevier, vol. 143(C).
    4. Alvarez, Jorge & Valencia, Fabian, 2016. "Made in Mexico: Energy reform and manufacturing growth," Energy Economics, Elsevier, vol. 55(C), pages 253-265.
    5. Majone, Giandomenico, 1997. "From the Positive to the Regulatory State: Causes and Consequences of Changes in the Mode of Governance," Journal of Public Policy, Cambridge University Press, vol. 17(2), pages 139-167, May.
    6. Paul L. Joskow, 2008. "Lessons Learned from Electricity Market Liberalization," The Energy Journal, International Association for Energy Economics, vol. 0(Special I), pages 9-42.
    7. Pollitt, Michael G., 2012. "The role of policy in energy transitions: Lessons from the energy liberalisation era," Energy Policy, Elsevier, vol. 50(C), pages 128-137.
    8. Borenstein, Severin, 2000. "Understanding Competitive Pricing and Market Power in Wholesale Electricity Markets," The Electricity Journal, Elsevier, vol. 13(6), pages 49-57, July.
    9. Ibarra-Yunez, Alejandro, 2015. "Energy reform in Mexico: Imperfect unbundling in the electricity sector," Utilities Policy, Elsevier, vol. 35(C), pages 19-27.
    10. Oscar W Fitch-Roy & David Benson & Bridget Woodman, 2019. "Policy Instrument Supply and Demand: How the Renewable Electricity Auction Took over the World," Politics and Governance, Cogitatio Press, vol. 7(1), pages 81-91.
    11. David Levi-Faur, 2005. "The Global Diffusion of Regulatory Capitalism," The ANNALS of the American Academy of Political and Social Science, , vol. 598(1), pages 12-32, March.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Schreiner, Lena & Madlener, Reinhard, 2022. "Investing in power grid infrastructure as a flexibility option: A DSGE assessment for Germany," Energy Economics, Elsevier, vol. 107(C).
    2. Keppler, Jan Horst & Quemin, Simon & Saguan, Marcelo, 2022. "Why the sustainable provision of low-carbon electricity needs hybrid markets," Energy Policy, Elsevier, vol. 171(C).
    3. Kaller, Alexander & Bielen, Samantha & Marneffe, Wim, 2018. "The impact of regulatory quality and corruption on residential electricity prices in the context of electricity market reforms," Energy Policy, Elsevier, vol. 123(C), pages 514-524.
    4. Dzikri Firmansyah Hakam, 2018. "Market Power Modelling in Electricity Market: A Critical Review," International Journal of Energy Economics and Policy, Econjournals, vol. 8(5), pages 347-356.
    5. Hakam, Dzikri Firmansyah, 2019. "Mitigating the risk of market power abuse in electricity sector restructuring: Evidence from Indonesia," Utilities Policy, Elsevier, vol. 56(C), pages 181-191.
    6. Fabrizio Gilardi, 2005. "The Institutional Foundations of Regulatory Capitalism: The Diffusion of Independent Regulatory Agencies in Western Europe," The ANNALS of the American Academy of Political and Social Science, , vol. 598(1), pages 84-101, March.
    7. Rabindra, Nepal & Tooraj, Jamasb, 2013. "Caught Between Theory and Practice: Government, Market, and Regulatory Failure in Electricity Sector Reforms," SIRE Discussion Papers 2013-22, Scottish Institute for Research in Economics (SIRE).
    8. Hyland, Marie, 2016. "Restructuring European electricity markets – A panel data analysis," Utilities Policy, Elsevier, vol. 38(C), pages 33-42.
    9. Liam Clegg, 2019. "Economic geography and the regulatory state: Asymmetric marketization of social housing in England," Environment and Planning A, , vol. 51(7), pages 1479-1498, October.
    10. Michael G. Pollitt, 2019. "The European Single Market in Electricity: An Economic Assessment," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 55(1), pages 63-87, August.
    11. Zheng, Xuemei & Menezes, Flavio & Nepal, Rabindra, 2021. "In between the state and the market: An empirical assessment of the early achievements of China's 2015 electricity reform," Energy Economics, Elsevier, vol. 93(C).
    12. Blagrave, Patrick & Furceri, Davide, 2021. "The macroeconomic effects of electricity-sector privatization," Energy Economics, Elsevier, vol. 100(C).
    13. Sirin, Selahattin Murat & Erten, Ibrahim, 2022. "Price spikes, temporary price caps, and welfare effects of regulatory interventions on wholesale electricity markets," Energy Policy, Elsevier, vol. 163(C).
    14. Nepal, Rabindra & Jamasb, Tooraj, 2015. "Caught between theory and practice: Government, market, and regulatory failure in electricity sector reforms," Economic Analysis and Policy, Elsevier, vol. 46(C), pages 16-24.
    15. Castellanos-Sosa, Francisco A. & Cabral, René & Mollick, André Varella, 2022. "Energy reform and energy consumption convergence in Mexico: A spatial approach," Structural Change and Economic Dynamics, Elsevier, vol. 61(C), pages 336-350.
    16. Juan C. Percino-Picazo & Armando R. Llamas-Terres & Federico A. Viramontes-Brown, 2021. "Analysis of Restructuring the Mexican Electricity Sector to Operate in a Wholesale Energy Market," Energies, MDPI, vol. 14(11), pages 1-26, June.
    17. Mircea (Mike) Bostan, 2021. "EU Electricity Policy (Im)balance: A Quantitative Analysis of Policy Priorities Since 1986," International Journal of Energy Economics and Policy, Econjournals, vol. 11(5), pages 298-309.
    18. Budi, Rizki Firmansyah Setya & Sarjiya, & Hadi, Sasongko Pramono, 2021. "Multi-level game theory model for partially deregulated generation expansion planning," Energy, Elsevier, vol. 237(C).
    19. Arina Nikandrova & Jevgenijs Steinbuks, 2017. "Contracting for the second best in dysfunctional electricity markets," Journal of Regulatory Economics, Springer, vol. 51(1), pages 41-71, February.
    20. Jacint Jordana & David Levi-Faur, 2005. "The Diffusion of Regulatory Capitalism in Latin America: Sectoral and National Channels in the Making of a New Order," The ANNALS of the American Academy of Political and Social Science, , vol. 598(1), pages 102-124, March.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:wodepe:v:31:y:2023:i:c:s2452292923000437. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: https://www.journals.elsevier.com/world-development-perspectives .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.