Macroeconomic Effects of Private Sector Participation in Latin America's Infrastructure

26 Pages Posted: 20 Apr 2016

See all articles by Lourdes Trujillo

Lourdes Trujillo

Departamento de Analisis Economico Aplicado; University College of London (UCL)

Noelia Martín Morales

Universidad de Las Palmas de Gran Canaria - Facultad de Ciencias Económicas y Empresariales - Dept. de Análisis Económico Aplicado

Antonio Estache

Université Libre de Bruxelles (ULB) - European Center for Advanced Research in Economics and Statistics (ECARES)

Javier Campos

University of Las Palmas de Gran Canaria - Analisis Economico Aplicado

Date Written: October 2002

Abstract

Trujillo, Martín, Estache, and Campos provide empirical evidence on the impact that private participation in infrastructure has had on key macroeconomic variables in a sample of 21 Latin American countries from 1985-98. Specifically, they look at the effects on GDP per capita, current public expenditures, public investment, and private investment, controlling for country effects and institutional factors. The authors also investigate the relevance of the specific contractual form of private participation contracts on these variables and show differentiated effects according to contract types.

The results suggest that:

• Private sector involvement in utilities and transport have some, but not impressive, positive effects on GDP per capita.

• There is some degree of crowding-out of private investment resulting from greenfield projects in utilities, and delayed crowding-in from concessions in transport.

• There is crowding-in of public investment by private participation in utilities, while there is crowding-out by increased private investment in transport.

• Private participation in utilities decreases recurrent expenditures, while in transport it results in an increase.

The net effect on the public sector account is uncertain, but this uncertainty is a major risk. The revelation of this risk may be the main contribution of this paper since it is inconsistent with the fiscal gains expected by many policymakers as they engage in infrastructure privatization programs.

This paper - a product of the Governance, Regulation, and Finance Division, World Bank Institute, and Finance, Private Sector, and Infrastructure Unit, Latin America and the Caribbean Region - is part of a larger effort in the Bank to increase understanding of infrastructure regulation.

Suggested Citation

Trujillo-Castellano, Lourdes and Martín Morales, Noelia and Estache, Antonio and Campos Méndez, Javier, Macroeconomic Effects of Private Sector Participation in Latin America's Infrastructure (October 2002). World Bank Policy Research Working Paper No. 2906. Available at SSRN: https://ssrn.com/abstract=636269

Lourdes Trujillo-Castellano (Contact Author)

Departamento de Analisis Economico Aplicado ( email )

Universidad de Las Palmas de Gran Canaria
Campus de Tafira
Las Palmas de Gran Canaria, Las Palmas 35017
Spain

University College of London (UCL)

Chadwick Building
Gower Street
London, London WC1E 6
United Kingdom

Noelia Martín Morales

Universidad de Las Palmas de Gran Canaria - Facultad de Ciencias Económicas y Empresariales - Dept. de Análisis Económico Aplicado ( email )

Dep. de Analisis Economico Aplicado
Las Palmas de Gran Canaria, Las Palmas 35017
Spain
+34 928 458216 (Phone)
+34 928 458183 (Fax)

Antonio Estache

Université Libre de Bruxelles (ULB) - European Center for Advanced Research in Economics and Statistics (ECARES) ( email )

Ave. Franklin D Roosevelt, 50 - C.P. 114
Brussels, B-1050
Belgium
32 (0)2 6503838 (Phone)

Javier Campos Méndez

University of Las Palmas de Gran Canaria - Analisis Economico Aplicado ( email )

Dep. Analisis Economico Aplicado
Las Palmas de Gran Canaria, Las Palmas 35017
Spain

HOME PAGE: http://www.jcampos.es

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