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Infrastructure “Privatization”: When Ideology Meets Evidence

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  • Antonio Estache

Abstract

The paper documents the differences between the rhetoric and the evidence on the infrastructure privatization experience that started in the mid-1990s. It shows the heterogeneity across regions and across sub-sectors of the relative importance of the private actors in infrastructure financing. It then reviews the long term evidence on the efficiency and equity effects of the policy. It shows that reformers have underestimated the trade-offs between efficiency and equity, as well as their fiscal effects. Moreover, it finds that in many cases, the initial improvements credited to privatization eroded with time in sectors in which competition was limited so that the performance differences with state-owned enterprises disappeared. Finally, it suggests that, in most countries, policies focusing on market structure, competition, regulation and institutional and governance strengthening have been much more important determinants of performance than privatization per se. It concludes by arguing that more realism and less ideology will go a long way in allowing the various forms of privatization to contribute to the global infrastructure agenda in the interest of all stakeholders.

Suggested Citation

  • Antonio Estache, 2020. "Infrastructure “Privatization”: When Ideology Meets Evidence," Working Papers ECARES 2020-28, ULB -- Universite Libre de Bruxelles.
  • Handle: RePEc:eca:wpaper:2013/309876
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    References listed on IDEAS

    as
    1. Emmanuelle Auriol & Claude Crampes & Antonio Estache, 2021. "Regulating public services, bridging the gap between theory and practice," Post-Print hal-03473074, HAL.
    2. Stéphane Saussier & Julie de Brux, 2018. "The Economics of Public-Private Partnerships," Post-Print hal-02494046, HAL.
    3. Kosec, Katrina, 2014. "The child health implications of privatizing africa's urban water supply," Journal of Health Economics, Elsevier, vol. 35(C), pages 1-19.
    4. Fumitoshi Mizutani & Andrew Smith & Chris Nash & Shuji Uranishi, 2015. "Comparing the Costs of Vertical Separation, Integration, and Intermediate Organisational Structures in European and East Asian Railways," Journal of Transport Economics and Policy, University of Bath, vol. 49(3), pages 496-515, July.
    5. Prachitha John & Ashwin Mahalingam & Akash Deep & A. Thillairajan, 2015. "Impact of Private Sector Participation on access and quality of services: systematic review of evidence from the electricity, telecommunications and water supply sectors," Journal of Development Effectiveness, Taylor & Francis Journals, vol. 7(1), pages 64-89, March.
    6. Sinan Küfeoglu & Michael Pollitt & Karim Anaya, 2018. "Electric Power Distribution in the World: Today and Tomorrow," Working Papers EPRG 1826, Energy Policy Research Group, Cambridge Judge Business School, University of Cambridge.
    7. Stéphane Saussier & Julie de Brux (ed.), 2018. "The Economics of Public-Private Partnerships," Springer Books, Springer, number 978-3-319-68050-7, August.
    8. Laurens Cherchye & Bram De Rock & Antonio Estache & Marijn Verschelde, 2015. "Efficiency Measures in Regulated Industries: History, Outstanding Challenges and Emerging Solutions," Working Papers ECARES ECARES 2015-09, ULB -- Universite Libre de Bruxelles.
    9. Abbott, Malcolm & Cohen, Bruce, 2016. "The privatization and de-privatization of rail industry assets in Australia and New Zealand," Utilities Policy, Elsevier, vol. 41(C), pages 48-56.
    10. Marson, Marta & Savin, Ivan, 2015. "Ensuring Sustainable Access to Drinking Water in Sub Saharan Africa: Conflict Between Financial and Social Objectives," World Development, Elsevier, vol. 76(C), pages 26-39.
    11. Auriol,Emmanuelle & Crampes,Claude & Estache,Antonio, 2021. "Regulating Public Services," Cambridge Books, Cambridge University Press, number 9781108833950, May.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    privatization; regulation; restructuring; efficiency; equity; distributional effects;
    All these keywords.

    JEL classification:

    • H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • L32 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Public Enterprises; Public-Private Enterprises
    • L33 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Comparison of Public and Private Enterprise and Nonprofit Institutions; Privatization; Contracting Out
    • L50 - Industrial Organization - - Regulation and Industrial Policy - - - General
    • L90 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - General

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