Lourdes Trujillo

Efficiency Gains from Port Reform and the Potential for Yardstick Competition: Lessons from Mexico

This paper shows how measures of relative efficiency performance could promote yardstick competition between port infrastructure operators. The illustration is based on a study of the efficiency effects of the Mexican 1993 Port Reform. It covers 1996-99 and relies on a stochastic production frontier to show that Mexicos ports achieved 2.8-3.3% average annual efficiency gains since reform. The port-specific measures point to consistent leaders and laggards which would not all be identified by common partial productivity indicators. This information could be built into an explicit incentive-based regulatory regime aiming at promoting catch-up by laggards.

Privatization and regulation of the seaport industry

With containerized shipping, maritime transport has changed profoundly. Among other things, it has shifted from labor-intensive to more capital-intensive activities, including larger specialized ships that require substantial investments in port infrastructure and equipment. Integrated transport chains have reduced transport costs so much that a shipper may find a distant port cheaper than a closer one. Modern ports must be competitive on times and prices for their services. Seaports must be integrated within logistical chains to serve their many functions. An efficient seaport requires infrastructure, superstructure, equipment, adequate connections to other modes of transport, a well-motivated management, and qualified employees. The public sector has been an important port organizer in the past, but private participation in port operations and infrastructure could make ports significantly more competitive. The authors provide an overview of changes in maritime activity, discuss concession contracts (a key instrument of privatization), and analyze how regulatory mechanisms affect such factors as seaport tariffs, port congestion, port safety, the quality of cargo handling, and relevant indicators of performance, finances, and factor productivity. They describe how an optimal seaport system should allocate tasks between the various institutions involved, including the port authority. The degree of a seaports decentralization, they conclude, depends on a country size, the number of ports it has, and its legal tradition. Among several national governments in Latin America--Argentina, Brazil, Colombia, Mexico, and Venezuela--there is an evident trend toward decentralization and greater autonomy for port authorities.

Infrastructure Performance and Reform in Developing and Transition Economies: Evidence from a Survey of Productivity Measures

The authors review about 80 studies on electricity and gas, water and sanitation, and rail and ports (with a footnote on telecommunications) in developing countries. The main policy lesson is that there is a difference in the relevance of ownership for efficiency between utilities and transport in developing countries. In transport, private operators have tended to perform better than public operators. For utilities, ownership often does not matter as much as sometimes argued. Most cross-country studies find no statistically significant difference in efficiency scores between public and private providers. As for the country-specific studies, some do find differences in performance over time but these differences tend to matter much less than a large number of other variables. Across sectors, private operators functioning in a competitive environment or regulated under price caps or hybrid regulatory regimes tend to catch up best practice faster than public operators. There is a very strong case to push regulators in developing and transition economies toward a more systematic reliance on yardstick competition in a sector in which residual monopoly powers tend to be common.

Short-sea shipping: an analysis of its determinants

Recent trends in production such as global sourcing, just-in-time deliveries and fragmented production chains have determined clear patterns in relation to growth in demand for freight transport. Although road transport has adapted better to the needs of this modern economy, congestion threatens to overwhelm overland carriage and limit economic growth. The transportation industry faces the challenge of developing an efficient and effective complement to the existing road system. One possible strategy is to revitalize coastal shipping such as Short-Sea Shipping (SSS). The objective of this article is to carry out a literature review and show how SSS can alleviate traffic congestion and enhance economic development by maintaining freight flow efficiency. Because ship transport offers higher fuel economy and lower emissions of harmful pollutants, SSS is considered to be one of the most sustainable and economically competitive modes of transport.

Price Caps, Efficiency Payoffs and Infrastructure Contract Renegotiation in Latin America

Twenty years ago, as the United Kingdom was getting ready to launch the privatization of its public services, Professor Littlechild developed and operationalized the concept of price caps as a regulatory regime to control for residual monopoly conditions in those services. Ten years later, Latin American countries, as they embarked into their own infrastructure reforms, also adopted the price cap regulatory model. Relying on a large data base on the factors driving contract renegotiation in the region and a survey of the literature on efficiency gains, the authors assess the impact of this regulatory regime in Latin America. They show that while the expected efficiency gains were amply achieved, these gains were seldom passed on to the users. Instead they were shared by the government and the firms. Moreover, the adoption of price caps implied higher costs of capital and hence, tariffs, and brought down levels of investment.

What does "privatization" do for efficiency? Evidence from Argentina's and Brazil's railways

Abstract Railway restructuring and privatization have now become a mainstream policy option in many developing countries. This paper provides the first analysis of the efficiency payoffs of railway reform for two developing countries, Argentina and Brazil. We track down the evolution of the performance of the private operators in both countries since reform, compare with the pre-reform performance when possible, distinguishing between the output and input sources of efficiency changes. This is done by computing the total factor productivity of each business unit since the regulators started collecting enough data.

Efficiency effects of “privatization” in Argentina’s water and sanitation services

This paper provides a “back-of-the-envelope” assessment of the efficiency effects of the reforms of the water sector in Argentina. Private operators are now key players in 15 of Argentinas provinces. While all have adopted incentive based regulatory regimes which require estimates of economic efficiency changes, none have actually issued any estimate yet. This paper provides upper bounds estimates of efficiency gains achieved for four operators. The paper concludes with a discussion of the implication of the results for regulatory accounting and data collection processes by regulators in developing countries relying on incentive based regulatory systems.

Public-Private Partnerships in Transport

This paper summarizes the evidence on the evolution of transport PPPs over the last 15 years or so. In the process, it provides a primer on the associated policy issues, including of the central role of project finance in the implementation of PPP policies and the debates on risk allocation in the design of PPPs. The paper also offers a discussion of the increasingly well recognized residual roles for the public sector in transport, with an emphasis on the regulatory debates surrounding the adoption of PPPs.

Technical Efficiency Gains from Port Reform: The Potential for Yardstick Competition in Mexico

The authors show how relatively standard methodologies can help to measure the efficiency gains from reforming the organization of port infrastructure, how those measures can be used to promote competition between ports, and how competition can be built into an incentive-driven regulatory regime. As illustration, they use a case study of port reform in mexico in 1993, the first efficiency analysis of port restructuring in a developing country. Their analysis, which covers 1996-99 and relies on a stochastic production frontier, shows that overall, Mexico has achieved annual efficiency gains of 6-8 percent in the use of port infrastructure since assigning its management to independent, decentralized operators. Changes in relative performance ratings are revealing. They identify consistent sets of leaders and laggards, including some that would not have been identified by partial productivity indicators commonly used in the sector. The authors main conclusions: 1) Reforms have significantly improved average port performance. 2) The analytically sound performance rankings allowed by the port-specific efficiency measures can help to promote yardstick competition in the sector. These rankings are superior to those that would emerge from use of partial productivity indicators. They account for the joint effects of all inputs on outputs--which is crucial, because it avoids the risk of inconsistent rankings based on different partial indicators, arbitrarily chosen. Developing the database method to measure efficiency in countries with no strong tradition of database development is an enormous task--especially in transport sectors, where the tradition of generating databases useful to policymakers is in its infancy. The most immediate effect of this exercise was to reveal the poverty of the database in the Mexican port sector and the need for regulators to invest in its development.

Government Expenditures on Education, Health, and Infrastructure: A Naive Look at Levels, Outcomes, and Efficiency

All interested parties seem to agree that it is important to be able to monitor public sector performance at the sectoral level, but most current work based on multi-country databases does not lend itself to country-specific conclusions. This is due to a large extent to major data limitations both on sectoral expenditures and on sectoral outcomes. This paper discusses the related issues and shows what we can do with the current data inspite of the drastic limitations. The main conclusions of the paper are that any efforts to assess country-specific performances in relative terms are likely to be difficult in view of the data problems. A rough sense of performance across sectors can be estimated for groups of countries, allowing some modest benchmarking exercises. These estimates show that low-income countries generally lag significantly behind higher-income countries. Efficiency has improved during the 1990s in energy and education but has not improved significantly in transport.