J. Luis Guasch

This book provides insights into infrastructure sector performance by focusing on the links between key indicators for utilities, and changes in ownership, regulatory agency governance, and corporate governance, among other dimensions. By linking inputs and outputs over the last 15 years, the analysis is able to uncover key determinants that have impacted performance and address why the effects of such dimensions resulted in significant changes in the performance of infrastructure service provision.

Infrastructure plays a key role in fostering growth and productivity and has been linked to improved earnings, health, and education levels for the poor. Yet Latin America is currently faced with a dangerous combination of relatively low public and private infrastructure investment. Those investment levels must increase, and it can be done. If LAC governments are to increase infrastructure investment in politically feasible ways, it is critical that they learn from experience and have an accurate idea of future impacts. This book contributes to this aim by producing what is arguably the most comprehensive privatization impact analysis in the region to date, drawing on an extremely comprehensive dataset.

Over the last twenty years, while developed countries witnessed unparalleled rise in new regulations, developing countries complemented their privatization, with deregulation practices in various sectors, and devised regulatory frameworks, particularly for the utilities sectors. The study analyzes the impact of economic regulation on productivity and efficiency among the Latin American and Caribbean developing countries, assessing their gains from regulatory reforms. Basic choices for regulation engineering are examined, both successful contract practices, such as in Jamaica, or specific legislation in Chile, to disastrous regulation decrees in Argentina, and shows contract practices, to be the salient choice for most Latin American countries. The study reviews various practices, such as franchises and concessions, as modes of private sector participation and alternatives to regulation, analyzing the design of these arrangements for competitive marketability of their goods and services. Privatization restructuring and regulation concepts are examined, and a methodology spells out considerations for state-owned monopolies, prior to privatization. Finally, the challenge of regulation is revised, where lessons on regulatory design are examined, and an analysis on discretionary practices, re-negotiation and structural issues is presented, along with regulatory best practices.