The Limits of Stabilization: Infrastructure, Public Deficits by Luis Serven, William Easterly

By Luis Serven, William Easterly

Over the Nineteen Eighties and Nineteen Nineties, so much Latin American international locations witnessed a retrenchment of the general public area from infrastructure provision and a gap up of infrastructure actions to the personal quarter. This booklet analyzes the results of those coverage adjustments from views. First, it reports in a comparative framework the main traits in infrastructure provision in Latin the USA over the past twenty years. moment, it evaluates the implication of those tendencies for financial progress and public deficits within the area. The ebook indicates that during such a lot nations inner most participation didn't absolutely offset the general public region retrenchment. the outcome used to be a slowdown in infrastructure accumulation, which entailed an important progress expense and weakened the meant effect of the infrastructure spending cuts on public region insolvency.

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Extra resources for The Limits of Stabilization: Infrastructure, Public Deficits and Growth in Latin America (Latin America and Caribbean Studies)

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Telephone Main Lines, 1980–97 (medians by region) Main lines (per 1,000 workers) 1,200 1,000 800 600 400 200 0 1980 1990 Latin America 1995 East Asia 7 1997 Industrial countries b. Total Telephone Lines, 1980–97 (medians by region) Main lines, including cellular phones (per 1,000 workers) 1,600 1,400 1,200 1,000 800 600 400 200 0 1980 1990 Latin America 1995 East Asia 7 1997 Industrial countries c. 1 (continued) d. 6 1998 East Asia 7 2000 Industrial countries e. B. de Mexico Latin America median Brazil Dominican Republic Peru Ecuador Bolivia El Salvador Paraguay Guatemala Honduras Nicaragua 1997 1980 0 100 200 300 400 500 600 spectrum, three smaller economies (Guatemala, Honduras, and Nicaragua) lagged far behind.

The analysis uncovers a contrast between private sector entry in utilities and in transport. For example, private participation in transport is associated with increases in current public spending and decreases in public investment. The opposite happens with private participation in utilities. Thus, in the former case private investment crowds out public investment but likely requires increased subsidies, whereas in the latter these conclusions are reversed. Contrary perhaps to common perception, the general implication is that private sector involvement does not have an obvious favorable effect on public finances, which should sound a cautionary note for those policymakers 16 THE LIMITS OF STABILIZATION looking to privatization of infrastructures as a remedy for their fiscal troubles.

4a shows the length of the road network per worker in Latin America and the East Asian newly industrialized countries (NICs). 4 Here Latin America has remained ahead of East Asia throughout the period of analysis, although the gap between the two regions has narrowed considerably over time. 4b presents similar information concerning overall transport routes, which include railways in addition to roads; the qualitative pattern is the same as in the preceding figure. 4c offers a comparative perspective of paved roads.

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