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Does infrastructure reform work for the poor? A case study from Guatemala

Author

Listed:
  • Vivien Foster
  • Maria Caridad Araujo

Abstract

Following the 1996 Peace Accords, Guatemala embarked on a major program of infrastructure reform involving the restructuring and privatization of the electricity and telecommunications sectors and a substantial increase in infrastructure investments partially financed by privatization proceeds. As a result, the pace of new connections to electricity, water, and sanitation services increased by more than 40 percent. Moreover, households in traditionally excluded sectors-the poor, rural, and indigenous populations-were twice as likely to be the beneficiaries of a new infrastructure connection than they had been prior to the Peace Accords. The teledensity index increased by a factor of five from 4.2 in 1997 to 19.7 in 2001, largely because of the growth in cellular telephones, which now outnumber fixed lines. The number of public telephones in rural areas increased by 80 percent since the Peace Accords, so that 80 percent of rural households are now within six kilometers from a public telephone. Although real electricity tariffs increased by 60-80 percent following the reform, residential consumers have been shielded by a"social tariff"policy that has kept charges at pre-reform levels. This policy, which costs US$50 million a year, does little to benefit poor households. The reason is that 60 percent of poor households are not connected to the electricity network, and those that are consume modest amounts of electricity and hence capture only 10 percent of the total value of the subsidy. In contrast, poor households without access to electricity pay about US$11 a kilowatt-hour (or 80 times the electricity tariff) to light their homes with candles and wick lamps. The resources used to finance the"social tariff"would therefore be better used in further accelerating the pace of new connections for currently underserved households.

Suggested Citation

  • Vivien Foster & Maria Caridad Araujo, 2004. "Does infrastructure reform work for the poor? A case study from Guatemala," Policy Research Working Paper Series 3185, The World Bank.
  • Handle: RePEc:wbk:wbrwps:3185
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    Citations

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    Cited by:

    1. Foster, Vivien & Yepes, Tito, 2006. "Is cost recovery a feasible objective for water and electricity ? The Latin American experience," Policy Research Working Paper Series 3943, The World Bank.
    2. Ali,Rubaba & Barra,Alvaro Federico & Berg,Claudia N. & Damania,Richard & Nash,John D. & Russ,Jason Daniel, 2015. "Transport infrastructure and welfare : an application to Nigeria," Policy Research Working Paper Series 7271, The World Bank.
    3. Gulyani, Sumila & Talukdar, Debabrata & Jack, Darby, 2010. "Poverty, living conditions, and infrastructure access : a comparison of slums in Dakar, Johannesburg, and Nairobi," Policy Research Working Paper Series 5388, The World Bank.
    4. Matthias Finger & Rolf W. Künneke (ed.), 2011. "International Handbook of Network Industries," Books, Edward Elgar Publishing, number 12961, April.
    5. World Bank, 2010. "Lesotho - Sharing Growth by Reducing Inequality and Vulnerability : Choices for Change A Poverty, Gender, and Social Assessment," World Bank Other Operational Studies 2884, The World Bank.
    6. Gunasekera, Kumudu & Anderson, William & Lakshmanan, T.R., 2008. "Highway-Induced Development: Evidence from Sri Lanka," World Development, Elsevier, vol. 36(11), pages 2371-2389, November.
    7. Whittington, Dale & Nauges, Céline & Fuente, David & Wu, Xun, 2015. "A diagnostic tool for estimating the incidence of subsidies delivered by water utilities in low- and medium-income countries, with illustrative simulations," Utilities Policy, Elsevier, vol. 34(C), pages 70-81.
    8. World Bank, 2004. "Drivers of Sustainable Rural Growth and Poverty Reduction in Central America : Guatemala Case Study, Volume 1. Executive Summary and Main Text," World Bank Other Operational Studies 14560, The World Bank.
    9. Catarina Figueira & David Parker, 2011. "Infrastructure Liberalization: Challenges to the New Economic Paradigm in the Context of Developing Countries," Chapters,in: International Handbook of Network Industries, chapter 27 Edward Elgar Publishing.
    10. repec:idb:idbbks:358 is not listed on IDEAS
    11. Komives, Kristin & Halpern, Jonathan & Foster, Vivien & Wodon, Quentin & Abdullah, Roohi, 2006. "The distributional incidence of residential water and electricity subsidies," Policy Research Working Paper Series 3878, The World Bank.
    12. 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.
    13. 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.

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