Privatization South American Style

By Luigi Manzetti | Go to book overview

2
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).


Table 2.1 Growth of Public Sector in Argentina, Brazil and Peru, 1970-82
Country Public Sector Outlays Estimated Share Public Sector
of PEs in Deficit as %
as % of GDP of which PEs (%) GDP (%) of GDP
1970 1982 1970 1982 1978-80 1970 1982
Argentina 33 35 11 12 20 1 14
Brazil 28 32 6 11 39 2 17
Peru 25 57 4 32 15 1 9
Source:Kuczynski ( 1988: 54).

-32-

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Privatization South American Style
Table of contents

Table of contents

  • Title Page iii
  • Contents vii
  • List of Figures viii
  • List of Tables ix
  • List of Abbreviations xi
  • 1 - The Political Economy of Privatization 1
  • Endnotes 30
  • 2 - Privatization in the 1980s: Politics as Usual 32
  • Endnotes 68
  • 3 - Argentina 71
  • Endnotes 141
  • 4 - Brazil 150
  • Endontes 226
  • 5 - Peru 232
  • Endnotes 288
  • 6 - The Theory and Practice of State Divestiture 294
  • Endnotes 331
  • References 333
  • Index 349
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