Privatization in the 1980s: Politics as Usual
The debt crisis that affected most of Latin America since the early 1980s came at a time of regime change in many countries as the military governments that took power in the 1960s and 1970s returned to the barracks having proven unable to tackle mounting socioeconomic problems. Civilian administrations were therefore elected in Peru ( 1980), Argentina ( 1983), and Brazil ( 1985).
All these countries, with the exception of Argentina, experienced a rapid growth of the public sector in the 1970s. Between 1970 and 1982, the outlays of PEs in GDP terms doubled in Brazil and grew eigthfold in Peru (Table 2.1). According to Kuczynski ( 1988: 55), 'The rapid growth in the role of state enterprises in the 1970s was . . . accompanied by rising nationalism and a growing tendency to regulate investment flows and prices. The same set of circumstances favored the larger established private enterprises as well . . . [while] foreign investment was in effect discouraged through restrictions on ownership and profit remittance as well as by red tape.' Thus PEs became major players in domestic economies. By 1983 Argentine PEs accounted for 42 per cent of the public sectors investments. In 1984, Brazilian and Peruvian PEs' investments were respectively 3.8 per cent and 4.8 per cent of total public investments (Table 2.2). Yet, during the 1970-82 period, the public sector deficit of all four countries (as a percentage of GDP) also skyrocketed (Table 2.1). In Argentina and Brazil, PEs contributed heavily to their countries' external debt as they obtained foreign loans to finance their investments and current expenditures (Table 2.2).
|Country||Public Sector Outlays||Estimated Share||Public Sector|
|of PEs in||Deficit as %|
|as % of GDP||of which PEs (%)||GDP (%)||of GDP|
|Source:Kuczynski ( 1988: 54).|