Publication

This paper illustrates that in the last 25 years many thousands of formerly state-owned firms have been privatized in developing and transition countries. However, contrarily to public opinion, privatization has not contributed to maldistribution of income or increased poverty - at least in the best-studied Latin American cases. Meanwhile, the author stresses that reform mechanisms are needed that give incentives and comfort to reputable private investors. They must also create and sustain the policy and regulatory institutions that make governments competent and honest partners with the private operators, while at the same time protecting consumers from abuse.