Javier Campos

Macroeconomic Effects of Private Sector Participation in Latin America's Infrastructure

The authors provide empirical evidence on the impact that private participation in infrastructure has had on key macroeconomic variables in a sample of 21 Latin American countries from 1985-98. Specifically, they look at the effects on GDP per capita, current public expenditures, public investment, and private investment, controlling for country effects and institutional factors. The authors also investigate the relevance of the specific contractual form of private participation contracts on these variables and show differentiated effects according to contract types. The results suggest that: 1) Private sector involvement in utilities and transport have some, but not impressive, positive effects on GDP per capita. 2) There is some degree of crowding-out of private investment resulting from greenfield projects in utilities, and delayed crowding-in from concessions in transport. 3) There is crowding-in of public investment by private participation in utilities, while there is crowding-out by increased private investment in transport. 4) Private participation in utilities decreases recurrent expenditures, while in transport it results in an increase. The net effect on the public sector account is uncertain, but this uncertainty is a major risk. The revelation of this risk may be the main contribution of this paper since it is inconsistent with the fiscal gains expected by many policymakers as they engage in infrastructure privatization programs.

Lessons from railway reforms in Brazil and Mexico

This paper describes the rail restructuring processes in Brazil and Mexico during the 1990s. It first reviews the way in which the transfer of public railroads to private concessionaires was accomplished in these countries, and then focus on the major challenges faced by them just after the privatization. From this analysis, at least three core lessons are drawn: concessioning can be a viable mechanism for rail privatization in some developing countries; regulatory problems inevitably emerge during and after the concessioning process; and, therefore, to minimize them, contract design should be carefully addressed in previous stages of the process.

Regulating Privatized Rail Transport

Traditionally, transport regulation has been viewed as an exercise in second-best optimization, acknowledging the existence of huge information problems. Then the rail industry was deeply restructured worldwide to halt erosion of the sectors share of transportation markets. Restructuring took different forms in different countries, ranging from simple reorganization measures to extreme restructuring -with the private sector increasingly participating in the sector and with the provision of infrastructure separated from the provision of services. The authors argue that regulation of the rail industry cannot remain unaffected by these changes. New regulatory scenarios and issues have emerged. For example, contracts have to be defined for private participation and quality surveillance instruments must be defined. Traditional price controls have to be adapted to, and mechanisms designed to manage and plan infrastructure investments in, the new environment. Restructuring has brought new problems, too. Where licenses have been used, for example, several concessionaires have been unable to meet the objectives spelled out in the concession contract. Contracts should be flexible enough to take account of novel situations that may affect company performance. And yet, for the system to be credible, there cannot be systematic, unjustified deviations from the franchise objectives. Regulation of the sector should be simple and flexible, with license contracts designed to include the private sector and with industry organization adapted to local circumstances. Regulation should be governed by principles that foster competition and market mechanisms, wherever possible. At the same time, it should provide a stable legal and institutional framework for economic activity. Otherwise, regulators should refrain from intervening in the market-unless the goal of economic efficiency (subject to the socially demanded level of equity) is in jeopardy.

The economic competitiveness of short sea shipping: an empirical assessment for Spanish ports

This paper empirically studies the competitiveness of selected Short Sea Shipping (SSS) corridors by comparing the generalised costs of different alternatives to move cargo from Spain to several European destinations either by road or by using a SSS multimodal corridor. In the context of fair and efficient intermodal competition promoted by European Union (EU) policies, our results show that, apart from the internalisation of the external costs and the existence of bottlenecks in transit times, the freight rates should be also considered as a critical factor in explaining why a particular SSS corridor is more/less competitive than its road alternative. For that reason, we perform an econometric analysis to determine the main drivers of maritime prices in several SSS routes and quantify to what extent the instruments promoted by EU maritime policies – higher frequencies, fiercer competition or direct subsidies – favour real price reductions on them.

Concentration measurement under cross-ownership. The case of the Spanish electricity sector

When major investors own shares in several firms in the same industry, the traditional approach to concentration measurement by the Hirschman–Herfindahl Index (HHI) fails to accurately reflect the level of competition in the market. To address this problem we derive a generalized HHI formula (GHHI) based on the investors’ degree of control over each firm. We test alternative definitions of this control with actual data from the Spanish electricity sector and show that recent decisions in this industry, particularly the failed merger between the largest firms, Endesa and Iberdrola, could have been affected had the GHHI been used by the competition agency.

Tourism and high speed rail in Spain: Does the AVE increase local visitors?

This paper analyses from an empirical point of view the relationship between the provision of high-speed rail services (HSR) and the evolution of tourism at the local level in Spain. We have built a database of 124 municipalities during the 2005-2012 period to study the effects of the introduction of new HSR corridors on the number of visitors and their total and average stay at several end-line and intermediate cities as compared to similar counterparts not having such an infrastructure. We combine both difference-in-difference and panel data techniques to find that these effects are, in general, extremely weak or just restricted to larger cities, once other determining factors are controlled for. JEL classification: R42; R53; L83

Tasa de descuento social y evaluación de proyectos: algunas reflexiones prácticas para América Latina y el Caribe

La eleccion de la tasa social de descuento constituye uno de los elementos criticos en los procesos de evaluacion de proyectos publicos, y en particular en el analisis costo-beneficio sobre el que aun persisten algunos problemas practicos y cuestiones a resolver de especial interes. El presente documento aborda el rol de la tasa de descuento en la evaluacion de proyectos, atendiendo a las diferentes metodologias existentes y a las implicaciones teoricas y practicas que tiene tanto para autoridades nacionales como para organismos multilaterales.

Processes, Information and accounting gaps: learning from Argentina's privatized railways regulation

The paper uses the analysis of the main regulatory problems in Argentinas privatised railways to illustrate the importance of regulatory processes for the long run sustainability of privatisation strategies. Although many of the conflicts have been magnified by the recent crisis, we argue that they are in fact the result of a failure to create a set of rules of interaction among the government, regulators, users. We discuss in particular the main informational gaps, focusing on the failure to issue the regulatory accounting guidelines needed to implement the regulatory regime built in the contracts. Finally, we suggest solutions to close some of the information gaps.