Why do countries differ so much in the extent to which they adopt neoliberal, marketoriented reform in their infrastructure industries? Building on world-society and neoinstitutional theories in sociology, this paper argues that international pressures of coercion, normative emulation, and competitive mimicry strongly influence the domestic adoption of market-oriented reform. The paper considers the effect of such pressures on the adoption of four reform elements: the privatization of state-owned firms, the formal separation of the regulatory authority from the executive branch, the de facto elimination of executive political influence on the regulatory authority, and the opening of the retail market to multiple service providers. It finds generally robust support for its arguments using a multivariate probit analysis of reform adoption in the telecommunications and electricity industries of as many as 71 countries and territories between 1977 and 1999. The results also suggest that the coercive effect of...

/pdf/the-worldwide-diffusion-of-market-oriented-infrastructure-79tpqb262g.pdf

The Worldwide Diffusion of Market-Oriented Infrastructure Reform, 1977-1999

I examine the effect of reform on telecom performance using a second-generation regulatory framework index and panel data techniques to test how regulatory governance affected sector performance in 22 Latin American countries during the period 1980–1997. Sound regulatory governance in telecommunications has a positive impact on network expansion and efficiency, in both the static and dynamic specifications. Openness of markets to competition and divestment of former state-owned telco operators also contributed positively to better sector performance. The dynamic specification shows that past performance has its own strong effect on present (and perhaps future) performance.

The Effect of Endogenous Regulation on Telecommunications Expansion and Efficiency in Latin America

Using a comprehensive country‐level panel data set covering the period from 1990 to 2001, we investigate the impact of privatization and competition in the telecommunications sector around the world. Full privatization, which gave private owners control rights, contributed substantially to improving the allocation of labor and capital, expanding service output and network penetration, and improving labor and total factor productivities. But partial privatization, in which the state retained control rights, showed no significant impact. The increase in competitive pressure contributed substantially to growth in the sector by raising both factor inputs and total factor productivity. We also found evidence of complementarity between privatization and competition in deepening network penetration and in restraining the rise of service pricing among privatized operators. Our results are robust to plausible alternative specifications.

https://faculty.darden.virginia.edu/liw/papers/impact_of_privatization.pdf

The Impact of Privatization and Competition in the Telecommunications Sector around the World

Since World War II, developing nations have embarked on two massive changes in telecommunications policy. The first was the wave of nationalization of private companies that took place mostly in the 1950s and 1960s, and the second is the now ongoing process of re-privatization and, to a lesser degree, the introduction of competition. The purpose of this essay is to set forth the problems of contemporary neoliberal policy reform within the historical, economic and political context of these countries to assess the success of reform to date and to suggest future directions for research that might improve the performance of the sector. The existing literature well documents the decline in performance during the nationalization era and the improvements that reform usually brings; however, relatively little is known about the relationship between the details of reform and subsequent performance, or about the institutional factors that contribute to the stability of reform. The main conclusions are: (1) the recent literature on policy reform probably understates the importance of constructing regulatory governance institutions that are not captured by the newly reformed incumbent monopolist; (2) reform in some countries has focused too much on maximizing the revenues from the sale of state-owned enterprises rather than the long-run economic benefits of reform to consumers and society at large; and (3) too little attention has been given to creating an institutional environment, regulatory and legal, that supports a private and, where possible, competitive industry. The paper also argues that small developing countries probably should not allocate scarce educated technical civil servants to regulation, but should either adopt relatively simple "benchmark" systems or, better still, form multinational agencies for regulating prices and service standards.

Telecommunications Reform in Developing Countries

Demand for telecommunication services in developing countries

Figures Abbreviations Glossary Introduction Restructuring Telecommunications Services: A Transformation Without Boundaries Explaining Divergent Policy Outcomes Argentina 1980-1989: The Rocky Road to Reform Argentina 1989-1991: Full Privatization, Limited Liberalization Mexico 1988-1991: A Sweeping Reform Generalizing the Argument Success and Failure of Telecom Reform in Other LDCs The Socioeconomic Impact of Reform Conclusion Bibliography Index

Ben Alfa Petrazzini

Papers

The Political Economy of Telecommunications Reform in Developing Countries: Privatization and Liberalization in Comparative Perspective