Privatization: an opportunity

Abstract

Privatization is the reversal of the policy that was once called "nationalization" of public services, when many of them were in the hands of foreign investors. Nationalization was presented as patriotism to our unwary peoples, rather than calling things by name: statization, or market bureaucracy. Add to this the expired ideas of Raúl Prebisch and the Economic Commission for Latin America (ECLAC) - for example, the promotion of industrialization forced by the State to break the "structures", and the promotion of the expansion of the public sector caused by the various international aid programmes - we have the complete figure describing the typical Megalomaniac state of Latin America.

Some facts about this fashion over the last four decades are needed. In 1970,13 of the 90 countries overseen by the International Monetary Fund (IMF) spent 30% or more of gross domestic product (GDP) on the public sector. By 1980, they had increased to 40 countries, or three times as many. This growth is also measurable in the number of state-owned enterprises. Mexico, for example, had 150 state-owned enterprises by 1960, as by 1980 there were 400, and as a result of the statization of banking it reached 600. Brazil had 150 in 1960 and by 1980 had more than 700. Tanzania had 50 in 1965 and in 1980 they reached 400. Guatemala's parastatal budget was barely 5% of the state's total expenditure budget in 1962; in 1982 it became the same size as the central government, and it continues to be the same.