Privatization of public enterprises in Latin America

This book reviews experiences with privatization in six countries -- Argentina, Brazil, Chile, the Dominican Republic, Mexico, and Trinidad and Tobago. Major findings are as follows. (1) Of the countries studied, only Chile has, in effect, privatized major macroeconomic variables. In the other five countries, much less has actually been accomplished. (2) Resistance by public enterprise functionaries has been a major impediment to privatization. In Chile"s case, such opposition was crushed through political oppression. (3) To provide a hospitable framework for privatization, reforms are needed to liberalize trade, make exchange rates realistic, phase out subsidies, step up tax administration, strengthen capital markets, broaden the ownership of capital, and reduce public sector layoffs. These reforms can be implemented in phases rather than all at once, however. (4) A bold rather than piecemeal approach to privatization seems preferable, in part because such an approach would force public enterprise managers to take a more commercial view of their operations. (5) Measures to consult labor in regard to organizational improvements and to relocate public enterprise employees to other parts of the job market while payroll reductions take effect are essential.