EconPapers    
Economics at your fingertips  
 

Winners and losers from utility privatization in Argentina: lessons from a general equilibrium model

Omar Chisari, Antonio Estache and Carlos Romero

No 1824, Policy Research Working Paper Series from The World Bank

Abstract: The authors assess the macroeconomic and distributional effects of the privatization that Argentina began in 1989 in gas, electricity, telecommunications, and water and sanitation. Using a computable general equilibrium model, they track the effects of the changes observed between 1993, the first year by which all the major privatizations had taken place, and 1995, the most recent year for which data are available. In an innovative use of the model, they also assess the importance of the regulator in determining the distribution of gains and losses from utility privatization among sectors and income groups. They conclude that when regulators are effective, the annual gains from the private operation of utilities are about $3.3 billion, or 1.25 percent of GDP, and that all income classes benefit. Ineffective regulation cuts the gains from the reform by $1 billion or 0.35 percent of GDP. This cut in gains represents an implicit tax of 16 percent on the average consumer, paid directly to the owner of the utility rather than to the government. For the poorest income classes, thisimplicit tax is about 20 percent, meaning that good regulation is in the interest of the poor. The authors also show that the privatization of utilities cannot be blamed for the significant increase in unemployment observed in Argentina since 1993. Effective regulation can lead to a decline in unemployment, and ineffective regulation leads to only a small increase in unemployment. But the gains from utility privatization were not sufficient to offset the negative efficiency and distributional impact on the economy of the Tequila effect, which increased unemployment dramatically by limiting access to credit for users and producers alike.

Keywords: Environmental Economics&Policies; Economic Theory&Research; Labor Policies; Banks&Banking Reform; International Terrorism&Counterterrorism; Environmental Economics&Policies; Economic Theory&Research; Banks&Banking Reform; Public Sector Economics&Finance; Health Economics&Finance (search for similar items in EconPapers)
Date: 1997-09-30
References: Add references at CitEc
Citations: View citations in EconPapers (30)

Downloads: (external link)
http://www-wds.worldbank.org/external/default/WDSC ... d/PDF/multi0page.pdf (application/pdf)

Related works:
Working Paper: Winners and Losers from Utility Privatization in Argentina. Lessons from a General Equilibrium Model (1999) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:wbk:wbrwps:1824

Access Statistics for this paper

More papers in Policy Research Working Paper Series from The World Bank 1818 H Street, N.W., Washington, DC 20433. Contact information at EDIRC.
Bibliographic data for series maintained by Roula I. Yazigi ().

 
Page updated 2025-03-22
Handle: RePEc:wbk:wbrwps:1824