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

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

8
Liquid Equity Markets as an Engine for Long-Term Growth in Latin America

Diana R. Harrington

For more than a decade I have been watching, at an academic's arm's length, the behavior of the Latin American capital markets. My interest was corporate finance and how corporations exist financially in a world with high inflation, rapidly changing economic conditions and government policies and regulations, and illiquid capital markets. What I found were corporate executives whose creativity and sophistication were remarkable, and essential. I also found many of the firms strangled for cash, even those companies whose skilled managements were operating otherwise successful businesses.

In much of Latin America, the 1980s was a time when companies as well as countries were starved for capital. The capital markets, the single best source for long-term corporate capital, were essentially inoperative. Today, in the 1990s, however, that may be about to change.

The new confidence that democratic governments and increased economic constancy in Latin America have brought to international and domestic investors, has focused attention on and increased the capital flows to Latin American corporations. In addition, the recent success of the major stock markets in the region (those in Argentina, Brazil, Chile, and Mexico) has attracted the attention of international and domestic investors.1 Healthy and liquid capital markets can be a benefit to the long-term growth of Latin American corporations and the region.

This is also a danger. If the recent interest in Latin American securities and markets turns out to have been a speculative bubble, the opportunity for lasting, viable, liquid markets, which provide capital to corporations and liquidity to investors, will have disappeared again. The disappearance of viable capital markets will discourage growth in the region and impede the return of domestic investors.

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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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