V I H lUsf^i t!A ^A "\ / An/\ I /k A- 7- The Impact of Private Sector Participation in Infrastructure UGHTS, SHADOWS, AND THE ROAD AHEAD Luis A. Andres J. Luis Guasch Thomas Haven Vivien Foster D PPIAF THEWORLDBANK The Impact ofPrivate Sector Participation in Infrastructure Copyrightedmaterial Copyrightedmaterial The Impact of Private Sector Participation in Infrastructure Lights, Shadows, and the Road Ahead Luis A. Andres, Luis Guasch, J. Thomas Haven, and Vivien Foster m THEWORLDBANK Washington,D.C. Copyrightedmaterial — ©1821800H8TSthreeeItnNteWrnationalBankforReconstructionandDevelopment/TheWorldBank WashingtonDC20433 Telephone:202-473-1000 Internet:www.worldbank.org E-mail:[email protected] Allrightsreserved 123411100908 ThisvolumeisaproductofthestaffoftheInternationalBankforReconstructionandDevel- opment/TheWorldBank.Thefindings,interpretations,andconclusionsexpressedinthis volumedonotnecessarilyreflecttheviewsoftheExecutiveDirectorsofTheWorldBankor thegovernmentstheyrepresent. 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Allotherqueriesonrightsandlicenses,includingsubsidiaryrights,shouldbeaddressed totheOfficeofthePublisher,TheWorldBank,1818HStreetNW,Washington,DC20433, USA;fax:202-522-2422;e-mail:[email protected]. ISBN:978-0-8213-7409-2 elSBN:978-0-8213-7410-8 DOI:10.1596/978-0-8213-7409-2 LibraryofCongressCataloging-in-PublicationData Theimpactofprivatesectorparticipationininfrastructure:lights,shadows,andtheroad ahead/LuisA.Andres...[etal.]. p.cm.—(LatinAmericandevelopmentforumseries) Includesbibliographicalreferences. ISBN978-0-8213-7409-2(prin—t)—ISBN978-0-8213-7410-8(electronic) 1.Infrastructure (Economics) L—atinAmerica.2.Public-pri—vate sectorcoop—eration LatinAmerica.—3.Publicutilities Finance.4.Publicutilities LatinAmerica Finance. 5.Privatization LatinAmerica.I.Andres,Luis.II.WorldBank. HC130.C3I472008 363.6098—dc22 2008014496 Coverdesign: ULTRAdesigns. Copyrightedmaterial Latin American Development Forum Series Thisserieswascreatedin2003topromotedebate,disseminateinformation andanalysis,andconveytheexcitementandcomplexityofthemosttopical issuesineconomicandsocialdevelopmentinLatinAmericaandtheCarib- bean.ItissponsoredbytheInter-AmericanDevelopmentBank,theUnited NationsEconomicCommissionforLatinAmericaandtheCaribbean,and theWorldBank.Themanuscriptschosenforpublicationrepresentthehigh- estqualityineachinstitution'sresearchandactivityoutputandhavebeen selected for their relevance to the academic community, policy makers, researchers,andinterestedreaders. Advisory Committee Members AliciaBarcena Ibarra, Executive Secretary, Economic Commission for LatinAmericaandtheCaribbean,UnitedNations Ines Bustillo, Director, Washington Office, Economic Commission for LatinAmericaandtheCaribbean,UnitedNations JoseLuisGuasch,SeniorAdvisor,LatinAmericaandtheCaribbeanRegion, World Bank; and Professor ofEconomics, University of California, SanDiego SantiagoLevy,GeneralManagerandChiefEconomist,ResearchDepart- ment,Inter-AmericanDevelopmentBank EduardoLora, PrincipalAdvisor, Research Department, Inter-American DevelopmentBank LuisServen,ResearchManager,DevelopmentEconomicsVicePresidency, WorldBank AugustodelaTorre,ChiefEconomist,LatinAmericaandtheCaribbean Region,WorldBank v Copyrightedmaterial Copyrightedmaterial Other Titles in the Latin American Development Forum Series NewandForthcomingTitles China's and India's Challenge to Latin America: Opportunity or Threat?(2008)byDanielLederman,MarceloOlarreaga,andGuillermo E.Perry,editors Does the Investment Climate Matter? 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BeforejoiningtheWorldBank, he wasthechiefofadvisorsforthesecretaryoffiscalandsocialequity,and forthegovernmentofArgentinaandheldothertoppositionsinthechief ofcabinetofministriesandtheMinistryofEconomy.Heholdsadoctorate ineconomicsfromtheUniversityofChicago. JoseLuisGuasch,aSpanishnational,iscurrentlyseniorregionaladvisorin theLatinAmericaandCaribbeanRegionoftheWorldBankinWashington, D.C.,responsiblefortheareasofcompetitiveness,regulation,infrastructure, innovation,andtechnologicaldevelopment;heisalsoHeadoftheWorld BankInfrastructureRegulationThematicGroup.Hehasbeenaprofessor ofeconomics atthe University ofCalifornia, San Diego, since 1980. He holdsadoctorateineconomicsfromStanfordUniversity,California,and an engineering degree from the Polytechnic University ofBarcelona in Spain.He haswrittenextensivelyinleadingeconomicjournals.Among his most recent books are: Managing the Regulatory Process: Design, Concepts,IssuesandtheLatinAmericaandCaribbeanStory;TheChal- lengeofDesigningandImplementingEffectiveRegulation:ANormative ApproachandanEmpiricalEvaluation;LaborMarkets:TheUnfinished Reform inLatinAmericaandCaribbean;ClosingtheGapinEducation andTechnologyinLatinAmerica; GrantingandRenegotiatingConces- sions:DoingitRight;andQualityandStandardsMatterforTradeand CompetitivenessInitiatives. ThomasHavenis a private sector development specialistfocusedonthe LatinAmericaandtheCaribbeanRegionoftheWorldBank.Hisworkat the Bank involves lending operations relatedto competitiveness, innova- tion,andenergy.Hisanalyticalworkhasdealtprimarilywithinfrastructure ix Copyrightedmaterial