Privatization in Latin America: New Roles for the Public and Private Sectors

By Werner Baer; Melissa H. Birch | Go to book overview

NOTES
1.
See Foxley ( 1979) as well as Vagary ( 1981) and Dahse ( 1979) (cited in Edward and Edwards, 1985). The idea appears to have been that selling controlling shares would generate a higher purchase price than if distribution were more widespread. Also see Marcel ( 1989) and Pinera ( 1986). Meller ( 1992) argued that, in an attempt to imitate the large industrial groups found in some East Asian countries, the government actively encouraged increased industrial concentration.
2.
The Unidad de Fomento, UF, is a unit of value indexed to inflation. Most large purchases involving loans of over 90 days were quoted in UF. In 1985, UF = CH $22.53, U.S. $1 = $CH 160.
3.
For discussions of Popular Capitalism in the United Kingdom, see Bishop and Kay( 1989), Holmes( 1989), Kay, Mayer, and Thompson (1986), and Vickers and Yarrow ( 1988).
4.
The Times, Dec. 21, 1984.
5.
Holmes ( 1989), p. 63 quoting M. Heseltine, Where There's a Will, p. 65.
6.
Clearly, there are losers in the form of the general citizenry whose government's net wealth is decreasing, but not as in the case of a land reform in which they are clearly identified and politically articulated.
7.
Bishop and Kay ( 1989), p. 650. Vickers and Yarrow also suggest that a fall in share prices below the purchase price before the next election could undo the positive benefits of the program so it was better that they be issued significantly below their expected free-trade price.
8.
The calculations for Chile were made using roughly 8 million as the adult population in 1988, based on figures in CEPAL Statistical Yearbook ( 1991).
9.
On the other hand, Marcel ( 1989) has argued that privatization in 1986 and 1987 sold for, on average, 40 percent of the present discounted value, implying a loss of U.S. $600 million in two years. While there are various ways of calculating the "fair" value of these firms, it must be tempered somewhat with a realization of the risk involved and the idea that the subsidy might have been higher if controlling shares were not sold.
10.
Both the United Kingdom and France developed a variety of "loyalty bonuses" to reward shareholders who held them for at least three years, with which they enjoyed some success. The incentive was usually an extra bonus share for every ten held as in Britoil, British Telecom, British Gas, and British Airways in the United Kingdom or Cie de Saint Gobain in France. For more detail on loyalty bonuses in France and the United Kingdom, see Seth ( 1989).
11.
Moreno ( 1985) related that total shareholders summed to about 18,000 persons, of which more than 99 percent own fewer than a million shares and 92.5 percent have less than 100,000. At the 1985 exchange price of CH $.5 per share, this implies an investment of about CH $50,000 pesos or U.S. $300. Meller ( 1990) put average consumption per family at about U.S. $370 per month in 1988.
12.
In 1987, taxes on income and property accounted for perhaps one-ninth of current revenue and one-eighth of all tax revenue. Taxes on goods and services, such as the value-added tax, accounted for just under half of current revenue and over half of total tax receipts. See Table 7.A3 for more detail.
13.
In 1982, the number of salaried workers was 2,746,700 and presumably grew larger by 1988. see CEPAL ( 1991). Bitar ( 1988) put the figure at .6 percent.

-159-

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Privatization in Latin America: New Roles for the Public and Private Sectors
Table of contents

Table of contents

  • Title Page iii
  • Contents v
  • Figures and Tables vii
  • Preface xi
  • Notes xiii
  • 1 - Privatization and the Changing Role Of The State in Brazil 1
  • References 18
  • 2 - Privatization and the Role of the State In Post-Isi Mexico 21
  • Notes 41
  • 3 - The Regulation of Newly Privatized Firms: an Illustration from Argentina 45
  • References 68
  • 4 - Privatization: the Role of Domestic Business Elites 71
  • Notes 91
  • 5 - Foreign Direct Investment in Latin America During the 1990s 95
  • Conclusion 112
  • Notes 113
  • References 114
  • 6 - The Financial Sector in Latin American Restructuring 117
  • Notes 131
  • Notes 132
  • 7 - Privatization with Share Diffusion: Popular Capitalism in Chile, 1985-1988 135
  • Conclusion 153
  • Appendix 155
  • Acknowledgements 158
  • Notes 159
  • Refferences 160
  • 8 - Liquid Equity Markets as an Engine For Long-Term Growth in Latin America 163
  • Notes 177
  • Notes 180
  • 9 - Privatization in Spain 183
  • References 200
  • Selected Bibliography 201
  • Index 207
  • About the Contributors 213
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