Chapter 1

agroindustries (10 percent). The program came up against ties to the private sector, either because of social concerns or
several obstacles: (1) the limited size of the financial mar- because it is not convinced the private sector can do a better
ket; (2) concems that a few groups, families, or foreigners job, then private and foreign investors will not be convinced
would dominate too much of the economy; and (3) most that the time and conditions are right for investment. Two
important of all, resistance from well-organized unions and recent Bank studies of cross-country experience, Galal and
from management and govemment bureaucrats that bene- others 1994 and Galal and Shirley 1995, assess the political
fit from sitting on the boards of public enterprises. and social complexities of divestiture and measure the
Slowing down the pace of privatization may help to main- impact of PE ownership on an economy's per capita income,
tain stability, but at a cost, because it also slows down the savings, and growth prospects. The findings support the view
pace of new job creation through the establishment of new that there are substantial advantages in terms of efficiency,
and more efficient private investments, and it prolongs the enhanced intemational competitiveness, and long-term
inefficiencies and misuse of scarce resources in the economy. growth of selling public enterprises and supporting divesti-
Most studies, including the Sader privatization study (table ture measures with appropriate competition policies.
2.2), find that weak privatization programs slow down the Since 1991/92, the Government has been preparing secadjustment
process and discourage foreign and local private toral studies, evaluating divestiture options, and identifying
investors. Without clear signals that the system has changed, constraints and opportunities. It has also focused on creatthe
reform process becomes much more tenuous and subject ing the necessary legal environment to regulate the stock
to costly political, social, and economic setbacks. After all, if exchange which will permit them to move forward in a pruthe
goverrment is not ready to relinquish productive activi- dent way for a stronger privatization effort in 1995/96.
TABLE 2.3
Basic infrastructure
(1990 = o00)
1985 1990 1991 1992 1993
Capacity
Roads (kilometers)
Paved
Transport vehicles in service
76 100 100 100 100
Passenger vehicles (units) 100 106 114 125
Cargo vehicles (units)
Electricity generating capacity (megawatts)
100 115 130 ISO
Total
Electricity distribution network (length)
100 100 100 100 100
High Tension 8 1 100 110 110 III
Medium Tension 73 100 107 115 123
Low Tension 67 100 108 118 127
Total 70 100 108 117 125
Potable water network (kilometers) 73 100 104 r/a 133
Telephone lines (lines per I 00 people) 65 100 III 124 135
Utilization (transport by mode)
Road
Passengers (number)
Freight (tons)
Rail
-
-
100
100
105
117
112
136
121
ISO
Passengers (number) - 100 99 107 98
Freight (tons)
Sea
- 100 100 109 109
Passengers (number) _100 89 89 78
Freight (tons)
Air
- 100 88 125 125
Passengers (number) - 100 71 106 123
Freight (tons) - 100 88 125 125
Real GDP 74 100 107 114 119
- Not avlable.
Source: VMdd Bank estmates and SIDES 1995.
RoLE OP THE STATE IN THE ECONOMY 17