ASi" kUCTURE FlOR DEVELOPMENT

De;finitin and data notes
Selected terms used in this Report
vestments in. fixed assets. (A lease may sometimes
be called a "service concession," and a BOT is some-
BOT (build-operate-transfer). A fo.-m of concession times called a "public works concession.")
usually referrng to totally new projects. Typically in Management conitractL An arrangement whereby a
aBOT, a privte party. (or consortium) agrees to fi- private contractor. assumes responsiblt fora full
nance, construct, operate, and maintain a facility for range of operation and maintenance functions, with
a specified period and dthen transfer the facility to a authority to: make day-to-day management decigovernmentor
other public authority. Variations in- sions. Compensation may be based partally on
dude BOOT (build--own--operate-transfer) and services rendered (as for service contracts) and
BOO (build-own-operate); in the last case, the con- partially on performance achieved (as in profit
tract accords the right to construct and operate the sharing).
facility, but the facility is not transferred back to the. Natural monopoly. An economidc activity.that is.
public sector.
most efficiently carried out by a single producer.
Concesion. -An arrangement whereby a private Parastatal (also.public.or state enteqnrie). An organparty
leases assets for service provision from a pub- nization. engaged in productive activityr that is
lic authority for an extended period and has respon- owned and controlled in majority by the state.
sibility for finaricing specified new fixed invest- .Perfonnance agreement. An agreement negotiate d
ments during. the period; these new assets then between the government and the public manager of
revert to the public sector at -expiration of the a public utility or a government department. It usucontract.
ally defines explicit commercia goals (such as de-
Contesfbzbilty. The vulnerability of an activity to gree of cost recovery) and may define noncommercompetition
from new enLtrants in a miarket.fThe key cial' goals (such as increases of services to poor
criterion for contestability is that costs of entering a neighborhoods). Its main purpose is to increase- the
market be recoverable (eg., through a sale of assets). accountability of both the government and the pub-
Corporatizationl Tfhe transformation of. a state- 1k managers by sharpening and clarifying the goals
owned eniterprise or agency into a legal entity suib- .of public entities.
ject to company law, incuding formal separation of, Service contract (or contracting out). An arrangeownership
and management responsbilihties, for ex- ment with the private sector to perform particular
ample, through a board of directors or other body. operating or maintenance functions for a fixed pe-
EconoTbi of scale. A characteristic of a production riod and for specified compensation.
utechology whereby - ;-: unit ; zontract. costs - '-- decline - with increasing
ally defines explicit comercial goals (such as de-
output over a large range. Economies of scale Co ntragoups
are a major source of natural monopoly i For operational and analytical purposes the World
Leasping An arrangement whereby a pivate party Bank's mami criterion for ldasfying economies is
(lessee)-contracts with a public authority for the gros ntioal prouct (Gm ) e capia Every
right to operate a facility (and the right to a flow of economy is pclassified
low-income, middle-inrevenues
from. providing a specific service) for a come (subdivided into lower-middle and upperspecified
period of time The facility continues to t be .nmiddle), or, high-incor. Other analytical groups,
owned by the public authority. Unlike in a conces- based on geographic regions, exports, and levels of
* - sion, the lesseel doesnot have responsitbilty for i- exteral debt are also used.