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Privatization in Latin America


  • John Nellis



In Latin America, privatization started earlier and spread farther and more rapidly than in almost any other part of the world. More, and larger, firms were sold, and more proceeds were raised. Despite positive microeconomic results, privatization is highly and increasingly unpopular in the region. The core social criticism is that privatization contributes to growing poverty and inequality levels in Latin America—and circumstantial evidence supports the claim. But recent and rigorous studies dilute or counter the negative views, concluding that privatization has contributed only slightly to rising unemployment and in equality, and either reduces poverty or has no effect on it. Still, while privatization may be winning the economic battle it is losing the political war: The benefits are spread widely, small for each affected consumer or taxpayer, and occur (or accrue) in the medium-term. In contrast, the costs are large for those concerned, who tend to be visible, vocal, urban and organized, a potent political combination.

Suggested Citation

  • John Nellis, 2003. "Privatization in Latin America," Working Papers 31, Center for Global Development.
  • Handle: RePEc:cgd:wpaper:31

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    References listed on IDEAS

    1. Gover Barja & Miguel Urquiola, 2003. "Capitalization, regulation and the poor: access to basic services in Bolivia," Chapters,in: Utility Privatization and Regulation, chapter 9 Edward Elgar Publishing.
    2. Chong, Alberto & Lopez-de-Silanes, Florencio, 2002. "Privatization and labor force restructuring around the world," Policy Research Working Paper Series 2884, The World Bank.
    3. Eduardo Lora & Ugo Panizza, 2002. "Structural Reforms in Latin America under Scrutiny," Research Department Publications 4303, Inter-American Development Bank, Research Department.
    4. Paredes M., Ricardo, 2001. "Redistributive Impact of Privatization and the Regulation of Utilities in Chile," WIDER Working Paper Series 019, World Institute for Development Economic Research (UNU-WIDER).
    5. J. Luis Guasch & Jean-Jacques Laffont & Stephane Straub, 2003. "Renegotiation of Concession Contracts in Latin America," ESE Discussion Papers 103, Edinburgh School of Economics, University of Edinburgh.
    6. Rafael La Porta & Florencio López-de-Silanes, 1999. "The Benefits of Privatization: Evidence from Mexico," The Quarterly Journal of Economics, Oxford University Press, vol. 114(4), pages 1193-1242.
    7. 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.
    8. Máximo Torero & Alberto Pascó-Font, 2003. "The social impact of privatization and the regulation of utilities in Peru," Chapters,in: Utility Privatization and Regulation, chapter 11 Edward Elgar Publishing.
    9. Gover Barja & Miguel Urquiola, 2003. "Capitalization, regulation and the poor: access to basic services in Bolivia," Chapters,in: Utility Privatization and Regulation, chapter 9 Edward Elgar Publishing.
    10. Antonio Estache & V. Foster & Q. Wodon, 2002. "Accounting for Poverty in Infrastructure Reform: Learning from Latin America's Experience," ULB Institutional Repository 2013/44108, ULB -- Universite Libre de Bruxelles.
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    Cited by:

    1. Daniele CHECCHI & Massimo FLORIO & Jorge CARRERA, 2004. "Privatization discontent and its determinants: evidence from Latin America," Departmental Working Papers 2004-23, Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano.
    2. Sirtaine, Sophie & Pinglo, Maria Elena & Guasch, J. Luis & Foster, Vivien, 2005. "How profitable are private infrastructure concessions in Latin America?: Empirical evidence and regulatory implications," The Quarterly Review of Economics and Finance, Elsevier, vol. 45(2-3), pages 380-402, May.
    3. John Nellis, 2006. "Privatization: A Summary Assessment," Working Papers 87, Center for Global Development.
    4. repec:idb:idbbks:358 is not listed on IDEAS
    5. Operations Evaluation Department, 2005. "2004 Annual Review of Development Effectiveness : The World Bank's Contributions to Poverty Reduction," World Bank Publications, The World Bank, number 7433.
    6. Kikeri, Sunita & Kolo, Aishetu, 2005. "Privatization : trends and recent developments," Policy Research Working Paper Series 3765, The World Bank.
    7. 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.
    8. Luis A. Andrés & J. Luis Guasch & Thomas Haven & Vivien Foster, 2008. "The Impact of Private Sector Participation in Infrastructure : Lights, Shadows, and the Road Ahead," World Bank Publications, The World Bank, number 6545.

    More about this item


    Latin America; privatization; poverty; inequality;

    JEL classification:

    • O54 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Latin America; Caribbean
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement

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