Mais privatizacoes, de um outro modo
This article, by Roberto Macedo- one of the authors in CGD's newest book Reality Check: The Distributional Impact of Privatization in Developing Countries, appeared in the major Brazilian newspaper O Estado de Sao Paulo.
The translated summary below was provided by Rachel Menezes.
Recently published in the U.S., the Center for Global Development book, Reality Check: The Distributional Impact of Privatization in Developing Countries, analyzes privatization in ten different developing countries, with a focus on social equity but also reviewing effects on firm efficiency and the economy.
In Brazil, economic studies have focused mostly on the latter, concluding based on financial and economic indicators that in general privatized firms have shown marked improvement in performance. In the book, Brazil's privatization program is analyzed in terms of its impact on assets distribution and tariff increase post-privatization. It concludes that a great opportunity was lost in the country to exploit privatization as a way to democratize capital, by distributing the expected benefits of privatization in the form of future pension benefits or stock holding to citizens. In addition, price increases following privatization had an overly harsh impact on poor consumers, who saw an increasing share of their income go to electricity and phone bills.
Price increases in privatized telephone services in particular damaged the positive evaluation that privatization in the sector had enjoyed given the benefits from enhanced access. These results, however, should not be blamed on privatization itself but on the manner in which it was carried out in Brazil. But with all its faults, the privatization program generated positive efficiency gains. And current analysis should consider - in the face of the latest corruption scandal in the Lula administration involving crony officials at state companies - that one of the greatest benefits of privatization in Brazil was that it significantly reduced the number of state-owned companies, leaving less room for corruption and bad management.
