Infrastructure Privatization and Regulation : Promises and Perils
Infrastructure is crucial for generating growth, alleviating poverty, and increasing international competitiveness. For much of the twentieth century and in most countries, the network utilities that delivered infrastructure services such as electricity, natural gas, telecommunications, railroads, and water supply were vertically and horizontally integrated state monopolies. But this approach often resulted in extremely weak services, especially in developing and transition economies and especially for poor people. Common problems included low productivity, high costs, bad quality, insufficient revenue, and shortfalls in investment. Over the past two decades many countries have implemented far-reaching institutional reforms restructuring, privatizing, and establishing new approaches to regulation. This article identifies the challenges involved in this massive policy redirection within the historical, economic, and institutional context of developing and transition economies. It also reviews the outcomes of these policy changes, including their distributional consequences especially for poor households and other disadvantaged groups. Drawing on a range of international experiences and empirical studies, it recommends directions for future reforms and research to improve infrastructure performance.
Summary: | Infrastructure is crucial for generating
growth, alleviating poverty, and increasing international
competitiveness. For much of the twentieth century and in
most countries, the network utilities that delivered
infrastructure services such as electricity, natural gas,
telecommunications, railroads, and water supply were
vertically and horizontally integrated state monopolies. But
this approach often resulted in extremely weak services,
especially in developing and transition economies and
especially for poor people. Common problems included low
productivity, high costs, bad quality, insufficient revenue,
and shortfalls in investment. Over the past two decades many
countries have implemented far-reaching institutional
reforms restructuring, privatizing, and establishing new
approaches to regulation. This article identifies the
challenges involved in this massive policy redirection
within the historical, economic, and institutional context
of developing and transition economies. It also reviews the
outcomes of these policy changes, including their
distributional consequences especially for poor households
and other disadvantaged groups. Drawing on a range of
international experiences and empirical studies, it
recommends directions for future reforms and research to
improve infrastructure performance. |
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