Some lessons of the Argentine privatization process

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Some lessons of the Argentine privatization process

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The reduction of the role of the State in the Latin American economies has become one of the central topics in the debate on the process of the economic and social restructuring of the region. Because of the magnitude and rapidity of its achievements, the programme carried out in Argentina in the early 1990s is seen as a paradigm which gives rise to reflection and offers a broad range of lessons for those countries seeking to maximize the social benefits that could be obtained from the privatization of public enterprises. From this point of view, the present article highlights some of the main macroeconomic repercussions of the privatization process (in the fiscal sphere, the external sector, the structure of relative prices, and investment);, together with its effects on market formation and the strategies of the main business conglomerates of the country, the forms of public regulation of the privatized areas, and the limitations and shortcomings observed. It is concluded that the short-term emphasis of the process probably militated against the achievement of many of the proposed objectives and departed from the criteria that could be deduced from the incipient international experience in this field. The failure of the authorities to pay much attention to certain fundamental issues (the transparency of the process, the need to take measures to put the enterprises to be privatized on a sound footing before offering them for sale, the maximization of transfer prices, the exercise of regulatory powers, the competitiveness of markets and of the economy as a whole, the consolidation of reserves in oligopolistic markets, etc.); resulted in the process making only a marginal -if not a frankly negative- contribution to social equity in Argentina.

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The reduction of the role of the State in the Latin American economies has become one of the central topics in the debate on the process of the economic and social restructuring of the region. Because of the magnitude and rapidity of its achievements, the programme carried out in Argentina in the early 1990s is seen as a paradigm which gives rise to reflection and offers a broad range of lessons for those countries seeking to maximize the social benefits that could be obtained from the privatization of public enterprises. From this point of view, the present article highlights some of the main macroeconomic repercussions of the privatization process (in the fiscal sphere, the external sector, the structure of relative prices, and investment);, together with its effects on market formation and the strategies of the main business conglomerates of the country, the forms of public regulation of the privatized areas, and the limitations and shortcomings observed. It is concluded that the short-term emphasis of the process probably militated against the achievement of many of the proposed objectives and departed from the criteria that could be deduced from the incipient international experience in this field. The failure of the authorities to pay much attention to certain fundamental issues (the transparency of the process, the need to take measures to put the enterprises to be privatized on a sound footing before offering them for sale, the maximization of transfer prices, the exercise of regulatory powers, the competitiveness of markets and of the economy as a whole, the consolidation of reserves in oligopolistic markets, etc.); resulted in the process making only a marginal -if not a frankly negative- contribution to social equity in Argentina.
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