Privatization In Latin America: Myths And Reality (Latin by Alberto Chong, Florencio Lopez de Silanes

By Alberto Chong, Florencio Lopez de Silanes

Privatization is below assault. starting within the Nineteen Eighties, hundreds of thousands of failing state-owned businesses around the globe were grew to become over to the personal region. yet public opinion has grew to become opposed to privatization. a wide political backlash has been brewing for a while, infused by means of accusations of corruption, abuse of marketplace energy, and overlook of the terrible. what's the actual list of privatization and are the criticisms justified? 'Privatization in Latin the US' evaluates the empirical facts on privatization in a quarter that has witnessed an in depth decline within the state's proportion of construction over the last two decades. The ebook is a compilation of contemporary stories that offer a complete research of the list of and accusations opposed to privatization, with vital strategies for the future.Seven nations are investigated: Argentina, Bolivia, Brazil, Chile, Colombia, Mexico, and Peru. This ebook could be very important to somebody drawn to the privatization debate yet specially to these all in favour of civil provider reform, company governance, monetary coverage, finance, and anticorruption efforts. 'Privatization is necessary yet debatable. whereas economists quite often desire it, others are skeptical. This e-book offers robust clinical facts that privatization has been worthy for lots of Latin American international locations, even though a few privatizations failed and a few teams in society misplaced out. As traditional, the satan is within the info: how privatization is conducted and what reforms accompany it are the most important to its good fortune. The e-book is easily a useful contribution to the privatization debate.' --Oliver Hart, Andrew E. Furer Professor of Economics, Harvard collage

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In Peru, the author also took advantage of privatization agreements that required firms to keep separate books for different units, thereby allowing data aggregation. 14 When none of these efforts could be undertaken, firms were discarded from the sample to ensure clean estimates. 3 Reasons for Firm Exclusion from the Privatization Sample Country Argentina Bolivia Brazil Chile Colombia Mexico Peru Merger with private firm Sale of small minority participation Firm was liquidated Missing information Recent sale Change in accounting standards Yes Yes Yes Yes Yes Yes Yes Yes — Yes — — — — Yes — — Yes — Yes Yes Yes Yes Yes Yes Yes Yes Yes — Yes Yes — — — — — Yes — Yes — — — Note: This table shows the main reasons for excluding some firms from the final sample in each country.

This evidence goes against the hypothesis that market power explains most of the gains. 5 points for firms in noncompetitive industries. 12 Median Changes in Profitability of Privatized Firms in Competitive and Noncompetitive Industries in Latin America Percentage points 35 30 25 20 15 10 5 0 −5 −10 −15 Chile Colombia Mexico Peru −20 Competitive industries Noncompetitive industries Note: Profitability is defined as the median ratio of operating income to sales, except for Peru where it is the mean net-income-to-sales ratio.

2 (continued) Study Torero 2005 Country sample, period, and methodology Peru. This study covers 36 nonfinancial firms, which account for 90 percent of privatization cases and 86 percent of total transactions. In addition, it includes a separate analysis for the financial sector. It tests whether performance indicators improved after privatization. Period: 1986–2000. Source: Megginson and Netter 2001; Chong and López-de-Silanes 2004. Summary of findings and conclusions Profitability, operational efficiency, and output increased after privatization.

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