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Utility privatization and the needs of the poor in Latin America - Have we learned enough to get it right?

  • Estache, Antonio
  • Gomez-Lobo, Andres
  • Leipziger, Danny

Efforts to reform utilities can affect poor households in varied, often complex, ways, but it is by no means certain that such reform will hurt vulnerable households. Many myths have been perpetuated in discussions of utility reform - and in many cases poor households have benefited from reform. What is amazing is the extent to which governments, and their advisors - sometimes including multilateral organizations - fail to measure, anticipate, and monitor how the privatization of utilities actually affects the poor. Many questions must still be answered before good general guidelines can be drawn, but the authors offer many suggestions about how social, regulatory, and privatization policy, can increase the benefits of utility reform for poor households. The good news is that many measures can be taken to improve the chances that poor households will benefit from reform. Chief among these is promoting competition, where possible. Essentially what is needed is political commitment to doing the right thing. If policy is weak before privatization, it is going to be weak after privatization as well. Privatization is no substitute for responsible policy on redistribution.

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Paper provided by The World Bank in its series Policy Research Working Paper Series with number 2407.

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Date of creation: 31 Aug 2000
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Handle: RePEc:wbk:wbrwps:2407
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  1. repec:cup:cbooks:9780521397421 is not listed on IDEAS
  2. S. Baranzoni & P. Bianchi & L. Lambertini, 2000. "Market Structure," Working Papers 368, Dipartimento Scienze Economiche, Universita' di Bologna.
  3. Chisari, Omar & Estache, Antonio & Romero, Carlos, 1999. "Winners and Losers from the Privatization and Regulation of Utilities: Lessons from a General Equilibrium Model of Argentina," World Bank Economic Review, World Bank Group, vol. 13(2), pages 357-78, May.
  4. Sandmo, Agnar, 1998. "Redistribution and the marginal cost of public funds," Journal of Public Economics, Elsevier, vol. 70(3), pages 365-382, December.
  5. Vickers, John, 1997. "Regulation, Competition, and the Structure of Prices," Oxford Review of Economic Policy, Oxford University Press, vol. 13(1), pages 15-26, Spring.
  6. repec:cup:cbooks:9780521265638 is not listed on IDEAS
  7. Dollar, David & Kraay, Aart, 2001. "Growth is good for the poor," Policy Research Working Paper Series 2587, The World Bank.
  8. Serra, Pablo, 2000. "Subsidies in Chilean public utilities," Policy Research Working Paper Series 2445, The World Bank.
  9. Komives, Kristin & Whittington, Dale & Wu, Xun, 2001. "Infrastructure coverage and the poor : the global perspective," Policy Research Working Paper Series 2551, The World Bank.
  10. Andres Gomez-Lobo, 1996. "The welfare consequences of tariff rebalancing in the domestic gas market," Fiscal Studies, Institute for Fiscal Studies, vol. 17(4), pages 49-65, November.
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