Privatization in Latin America

32 Pages Posted: 23 Mar 2008

See all articles by John Nellis

John Nellis

Center for Global Development

Date Written: 8/1/2003

Abstract

In Latin America, privatization started earlier and spread farther and more rapidly than in almost any other part of the world. More, and larger, firms were sold, and more proceeds were raised. Despite positive microeconomic results, privatization is highly and increasingly unpopular in the region. The core social criticism is that privatization contributes to growing poverty and inequality levels in Latin America-and circumstantial evidence supports the claim. But recent and rigorous studies dilute or counter the negative views, concluding that privatization has contributed only slightly to rising unemployment and inequality,and either reduces poverty or has no effect on it. Still, while privatization may be winning the economic battle it is losing the political war: The benefits are spread widely, small for each affected consumer or taxpayer, and occur (or accrue) in the medium-term. In contrast, the costs are large for those concerned, who tend to be visible, vocal, urban and organized, a potent political combination.

Keywords: Latin America, privatization, economic development

Suggested Citation

Nellis, John, Privatization in Latin America (8/1/2003). Center for Global Development Working Paper No. 31, Available at SSRN: https://ssrn.com/abstract=1111716 or http://dx.doi.org/10.2139/ssrn.1111716

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