Chapter 9: Capitalization, regulation and the poor: access to basic services in Bolivia
Gover Barja and Miguel Urquiola 1. INTRODUCTION Like other Latin American countries, Bolivia included privatization in a package of structural reforms that has signiﬁcantly liberalized its economy over the last 15 years. As elsewhere, in an eﬀort to attract investment and increase eﬃciency, utilities were among the key enterprises transferred to the private sector. As Estache et al. (2000) note, there is growing interest on how such transfers aﬀected lower income households, their access to basic services, and their welfare in general. While this has not generally been a major concern in Bolivia, the economic slowdown of the past two years has resulted in growing criticism of the entire liberalization process. Thus, further analysis of the ‘social’ impact of privatization could usefully inform on-going policy discussions. In this context, this study describes Bolivia’s privatization process, with emphasis on the particularities of ‘capitalization’, one of the mechanisms used for privatization, and its complementary regulatory framework. Against this background, the chapter then analyses the impact of reforms on lower income households along two dimensions: (i) access, understood as connection, and (ii) aﬀordability, as determined by changes in consumption and pricing patterns. The study focuses on urban households because of data availability, but rural areas are included whenever feasible. The general picture that emerges from the analysis points to the following observations: (i) Capitalization and regulation, and liberalization of the utilities sector in general, have succeeded in attracting foreign investment, thus fulﬁlling one of the central goals...
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