Bigger Economies, Smaller Governments: Privatization in Latin America

Bigger Economies, Smaller Governments: Privatization in Latin America

Bigger Economies, Smaller Governments: Privatization in Latin America

Bigger Economies, Smaller Governments: Privatization in Latin America

Synopsis

Privatization of large national enterprises has been the most far-reaching of Latin America's dramatic structural reforms, the objective being to underpin fiscal stability by shedding huge capital requirements. But long-term gains to the economy also depend on such factors as increased efficiency through better communications and infrastructure, and on a more dynamic private sector. Have these gains been achieved? Much has been written on the theory and objectives of privatization and on techniques for privatization. Until now, however, there has been little empirical examination of the results. In this volume, leading economists of Chile, Mexico, and Argentina assess the impact of privatization on fiscal stability, enterprise and economic efficiency, national savings, the development of capital markets, and advances in technology from both the micro-and macro-economic perspectives.

Excerpt

More than a decade after the launch of Latin America's ambitious privatization programs, it is possible to ask what has been achieved for the financial health of government, for the efficiency of enterprises and the economies, for capital formation, and for social welfare. Answering these questions is the objective of this volume, which represents the culmination of a four-year project of studies and dialogue organized by the Institute of the Americas, with support from the Andrew F. Mellon Foundation and the Pew Charitable Trusts.

Such a study necessarily concentrates on the countries that started first and have carried out the most ambitious privatizations: Chile, Mexico, and Argentina. the experience of three significant countries permits judgments that do not depend on the conditions and historical circumstances of one country or one approach and therefore have strong implications for the rest of the region, and indeed for the developing world.

The analysis presented here is predominantly that of Latin Americans. Their analysis of the impact of Latin America's privatizations, while carefully balanced, is distinctly encouraging with regard to what privatization can contribute to broad programs of economic and social reform.

William Glade has edited this study of Latin America's privatizations with the assistance of Rossana Corona of Mexico, a fellow at the Institute of the Americas in 1993. Jody Harrell, of the Institute of the Americas, supervised this project. Their work and that of the authors of the studies included in this volume offer a first cross-country assessment of what privatizations have done to change the way Latin America works.

Over four years, analysts, ministers, and heads of enterprises from eighteen Latin American countries participated in six conferences and seminars of the Institute of the Americas at the University of California, San Diego, in La Jolla, California. Their efforts, reflected in earlier publications of the Institute, contributed indirectly to the work of the analysts selected to perform this final study. the Institute of the Americas' mis-

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