Privatization in Latin America: What Does the Evidence Say?

fter decades of poor performance and inefficient operations by state-owned enterprises, governments all over the world earnestly embraced privatization. Thousands of state-owned enterprises have been turned over to the private sector in Africa, Asia, Latin America, and eastern and western Europe. This trend was spurred by the well-documented poor performance and failures of state-owned enterprises and the efficiency improvements after privatization around the world.1 Privatiza-tion efforts have greatly stalled in recent years, however, despite world-wide evidence that points to improved performance, firm restructuring, fiscal benefits, increased output, and quality improvements following privatization. Academia, politicians, and the media have recently attacked privatiza-tion, voicing concerns about its record, the sources of the gains, and its impact on social welfare and the poor.2 The negative reaction to privatiza-tion is reflected in opinion polls and some governments ’ reluctance t