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International Handbook on Privatization

Edited by David Parker and David Saal

Privatization has dominated industrial restructuring programs since the 1980s and continues to do so. This authoritative and accessible Handbook considers all aspects of this key issue, including: the theory of privatization; privatization in transition, developed and developing economies; as well the economic regulation of privatized industries.
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Chapter 13: Privatization in Mexico and Chile: A Critical Perspective

Miguel D. Ramírez


Miguel D. Ramírez Introduction1 The major countries of Latin America have been engaged for almost two decades in a process of radical market-oriented reform that has dramatically reduced state ownership and control of their domestic economies. Privatization of state-owned enterprises and the liberalization of trade and finance in countries such as Argentina, Brazil, Chile and Mexico have been carried out to such an extent that this has brought to an end the state-led development strategy known as import substitution industrialization (ISI). Deregulation of economic activity has also accompanied this process, as evidenced by the removal of what are deemed to be unnecessary controls and restrictions on the allocation of scarce resources in the product and factor markets of many countries of the region, notably Argentina, Chile and Mexico. One of the major consequences of the privatization and liberalization movement, in recent years, has been the transfer of public sector firms to the domestic (and foreign) private sector in highly concentrated industries, such as airlines, banking, telecommunications, petroleum exploration and refining, where usually one or two firms dominate these markets. The inherent danger of doing this is that it may lead to a situation where private monopolies just replace public ones and where powerful foreign and domestic interests exert undue control (without public accountability) over key economic decisions in strategic sectors of the economy – a state of affairs that circumscribes the host government’s room to manoeuvre and may compromise national sovereignty. Thus, unless an effective regulatory framework...

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