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Privatization And Poverty: The Distributional Impact of Utility Privatization

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Abstract

This article examines the effects on poverty of privatization, an impact to which donors have given little attention in their concern with efficiency and markets. The analysis of the distributional impact of privatization activities draws on empirical cases in the utilities sector in a wide range of developing economies, principally in Africa and Latin America. After a critical consideration of the World Bank position on privatization strategies, and the arguments presented by donors on the pro–poor effects of these economic reforms, the article turns to the negative distributional effects. It is argued that privatization has demonstrably damaged the poor, whether through loss of employment and income, or through exclusion from, or reduced access to, basic services. This is mainly because private firms are principally concerned with profits, prices and costs, and are highly selective as to sectors and types of consumer. Meanwhile, the weakness of governance and regulatory capacity in many developing countries lead to poor control of market abuses. The article concludes by proposing that donors should take more account of local variations in state–market relations, and be prepared to give consideration to alternative economic strategies where privatization is not working as intended.

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... As the anecdotal evidence on political view of privatization advocate that the new private shareholders de-emphasize political and government objectives that prevailed under high concentrated government ownership (Boycko et al. 1996;Boubakri et al. 2013). In particular, leading research on privatization point out that after government divestiture, the privatized firms' financial performance improves significantly (D'Souza and Megginson 1999;Gupta 2005;Boubakri et al. 2005a, b;Bai et al. 2009), while it is detrimental from macro-level social perspective, such as employment, income distribution, and poverty (Chong and López-de-Silanes 2005;Birdsall and Nellis 2003;Bayliss 2002). ...
... For instance, privatization of government assets and control may lead to a decrease in employment ratio(Chong and López-de-Silanes 2005), a decrease in wealth/income distribution(Birdsall and Nellis 2003), and also an increase in country's poverty(Bayliss 2002). These serious concerns have led to demonstrations against consequences of privatization in Italy, Thailand, Pakistan, Mexico, and Greece. ...
Article
This paper examines the link between privatization of state ownership and corporate social responsibility performance. Using a sample of Chinese listed companies between 2010 and 2015, we find evidence that privatization is negatively associated with firms’ social performance but this negative relationship is weaker for firms that have politically connected board members. These results suggest that the firm’s likelihood to engage in social activities results primarily from political connections and from significant government control over the firm’s decisions, as such firms are subject to higher pressure than other firms are. Moreover, our findings have important implications for policymakers in understanding companies’ social behavior in an emerging market.
... However they do find negative impact on jobs losses, which according to them were relatively low compared to the nation wide employment. Bayliss (2002) on the contrary, although anecdotal, emphasizes that privatization has had a negative impact on the poor in terms of job loss, decrease in income and reduced access to basic services. However, to get a clearer picture, privatization should be assessed in its economic, historical and social context (p. ...
... However, as a result of "government failures" 12 in some countries during the late 1980s and due to some relative successes in privatization and liberalization in developed economies, international development agencies and donors tried promoting privatization, liberalization and deregulation in developing economies. As a result, privatization has also become one of the key conditionality elements of donor agencies and international development institutions like World Bank, IMF and even in Poverty Reduction Strategy Papers (PRSPs), Heavily Indebted Poor Countries (HIPC) for the disbursement of aid funding (Bayliss 2002). Empirical studies do support this view that aid plays a strong role in deregulating and liberalizing an economy (Kilby 2005). ...
... In fact, asides from cost savings, one of the justifications for privatization of public services has also been providing better and cheaper access to a larger number of consumers of those services (Savas, 2000). Yet, critics have argued that privatization of public services has led to unequal service delivery and higher costs for consumers accessing those services, which are particularly unfavorable to the urban poor (Bayliss, 2002). Privatization in practice then appears to be inimical to the goal of universal service provision. ...
... "Entrepreneurial" cities in the neoliberal era require that their municipal governments act as cost-saving business actors by adopting austerity policies that cut or privatize crucial public services (Harvey, 1989;Peck, 2012). Under the aegis of the World Bank and the IMF, developing countries across the world were implementing neoliberal structural economic reforms that required a "roll-back" of the state (Bayliss, 2002). The 1991 IMF bailout economic reforms adopted by the Indian Government mandated public sector restructuring: governmental disinvestment in public sector companies and the opening of public sector industries to private sector participation (Ahluwalia, 1993). ...
Article
Purpose Rapid economic growth and urbanization in India have increased demand for municipal services. In response, privatization has emerged as a policy solution to a growing deficit in urban infrastructure and service provision. But, privatization assumes prior state ownership of those services. Certain waste management services, specifically doorstep waste collection, have never been truly public in the sense that private informal actors have historically provided them. The purpose of this paper is to examine the tensions and contradictions between two related policy imperatives – universal service provision and privatization – that appear to be guiding the municipalization of solid waste collection services in urban India. Design/methodology/approach Research for this paper relies on detailed analysis of key government documents (reports of various committees, regulations and laws) that have been important in defining municipal responsibilities for waste management in India from 1990 to 2016. In addition, where appropriate, research materials from the author’s doctoral dissertation fieldwork in Delhi from October 2012 to December 2013 have also been used. Findings An analysis of key policy documents revealed that the government’s efforts to document deficits in service provision ignored, and thus rendered invisible, the work of the informal sector. While a consensus on the need for universal waste collection service had emerged as early as the late 1990s, it was not until 2016 that municipal responsibility for service provision was codified into law. The rules issued in 2016 municipalized this responsibility while simultaneously opening up spaces for the inclusion of the informal sector in waste collection service provision. Originality/value This paper fills a gap in the existing literature on how policy interventions have brought the space of the doorstep into the ambit of the state such that it allows for the opening up of those spaces for the entry of private capital. Under the guise of universal service provision, the shift to municipalization and outsourcing to private corporations is not in fact privatization – service provision is already private – but involves the dispossession of informal workers and the transfer of their resource to the formal, corporate sector.
... As the anecdotal evidence on political view of privatization advocate that the new private shareholders de-emphasize political and government objectives that prevailed under high concentrated government ownership (Boycko et al. 1996;Boubakri et al. 2013). In particular, leading research on privatization point out that after government divestiture, the privatized firms' financial performance improves significantly (D'Souza and Megginson 1999;Gupta 2005;Boubakri et al. 2005a, b;Bai et al. 2009), while it is detrimental from macro-level social perspective, such as employment, income distribution, and poverty (Chong and López-de-Silanes 2005;Birdsall and Nellis 2003;Bayliss 2002). ...
... For instance, privatization of government assets and control may lead to a decrease in employment ratio(Chong and López-de-Silanes 2005), a decrease in wealth/income distribution(Birdsall and Nellis 2003), and also an increase in country's poverty(Bayliss 2002). These serious concerns have led to demonstrations against consequences of privatization in Italy, Thailand, Pakistan, Mexico, and Greece. ...
Article
Purpose This study aims to investigate the question concerning whether tournament incentives motivate chief executive officers (CEOs) to be socially responsible. Design/methodology/approach Data from all A-share Chinese companies listed on the Shanghai and Shenzhen stock exchanges for the period from 2010 to 2015 are used. To draw inferences from the data, ordinary least squares (OLS) regression and cluster OLS are used as a baseline methodology. To control for the possible issue of endogeneity, firm-fixed-effects regression, two-stage least squares regression and propensity score matching are used. Findings A reliable evidence is found that tournament incentives motivate CEOs to be more socially responsible. Additional analysis reveals that the positive effect of CEO tournament incentives on corporate social responsibility performance (CSRP) is more pronounced in state-owned firms than it is in non-state-owned firms. The study’s findings are consistent with tournament theory and the conventional wisdom hypothesis, which proposes that better incentives lead to competitiveness, which improves financial and social performance. Practical implications The study’s findings have implications for companies and regulators who wish to enhance CSRP by giving tournament incentives to top managers. Investment in social responsibility may reduce the conflict between executives and employees and improve the corporate culture. Originality/value This study contributes to the existing literature by providing the first evidence that CEOs’ tournament incentives play a vital role in CSRP. The study’s findings contribute to tournament theory.
... These reforms usually took the form of the privatisation of State Owned Enterprises (SOEs) on the basis of the argument that privatisation leads to improvement in economic efficiency, management and consequently to better economic performance (ibid). However, Bayliss (2002) more generally notes that privatisation when tied to aid tends to worsen poverty and inequality. This is because failure to privatise results in delays in the disbursement of critical aid. ...
... These tariff adjustments have not been accompanied by extending the water supply system or improving the quality of the existing service. Fuest and Haffner (2007) have noted that increasing tariffs before extending supply networks creates more poverty as these costs disproportionately fall on the poor (cf Bayliss, 2002;Hirvi, 2012). ...
Article
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Introduction "Water is life" the mantra goes and hence many argue that it must be seen as a basic human right that people have access to clean and safe water at affordable cost. Consequently, in many countries the water sector is usually controlled by state institutions at national, regional and local levels because water is considered as a public good. While this is certainly the case in most developed countries, in a number of developing countries there is an ongoing process of reforms in the water sector. Such reforms in developing countries entail the opening up of the water sector for private sector participation for a number of reasons. Ghana is one such developing country where the water sector has undergone numerous reforms. At the behest of the Bretton Woods Institutions, the Government of Ghana (GoG) since the early 1990s has formulated and implemented a number of comprehensive reforms in its water sector. Such policy interventions have had both intended and unintended impacts on water supply in the country as well as on the accessibility and affordability of it for different categories of people especially the urban poor. The main aim of this paper is to analyse the policy process of water sector reforms in Ghana up to date. This paper will seek to answer four key analytic questions: i) why did the GoG embark on the [particular kind of] reform of the water sector; ii) why did it opt for a management contract as a final policy option; iii) why was the management contract not renewed after it expired and finally; iii) what have been the intended and unintended impacts of these reforms on the urban poor. This paper is structured into seven sections in order to fully address the aim and key questions. The first section being the introduction has outlined the main concern of this paper. The next section will provide a brief background of the water sector in Ghana identifying the characteristics that supported the arguments for reforms. The third section looks at the various policy proposals made and analyses the inherent contradictions within the proposals. Section four assesses the oppositions to the policy proposals in order to link section five dealing with the final adopted policy option. Prior to concluding the paper, section six provides an analysis of the effects of the policy process and outcome for the urban poor.
... We have argued that most firms will benefit from moredeveloped infrastructure. In the process of achieving this end, however, some institutional factors allow large elite firms to pursue their narrow private interests, often at the expense of society (Bayliss, 2002;Campbell-White and Bhatia, 1998). For example, during the privatization of the development of hard infrastructure, such as electricity and telecommunications systems, in Latin America in the 1990s, powerful domestic elites influenced the process to disproportionately benefit themselves (for a review of privatization, see Megginson and Netter, 2001). ...
Article
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This paper examines the circumstances under which collective and private corporate political actions are more likely to be substitutes or complements. Using data based on a series of nationwide surveys conducted on privately owned firms in China, I find that firms that are engaged in collective political actions are more likely to pursue private political actions. This positive relationship is stronger in less economically developed provinces and when there are greater opportunities for the state to redistribute economic resources in product and capital markets. Meanwhile, this relationship is weaker in the presence of heavier regulatory burdens and for firms in which the state has some equity or owned by individuals who had prior political careers. These findings contribute to the corporate political action (CPA) literature.
... One group of authors support privatization and argue that it has positive impacts on company performance and country's economics development (Magginson and Netter, 2001;Vickers and Yarrow, 1995;Dewenter and Malatesta, 2001;D'Souza and Megginson, 1999 and others). On the other hand, other group of authors does not support privatization of strategically important enterprises and argue that privatization has negative impacts country's economics development and growth (Campbell-White and Bhatia, 1998;Bayliss, 2002 and others). ...
Article
Full-text available
One of the biggest questions battling governments around the world is performance of State Owned Enterprises (SOEs), as they are one of the biggest companies in every country and have a large share in economics growth and prosperity. Power, water and other types of independence of each country are mainly based on resources controlled by State Owned Enterprises. This issue became more important in last few decades due to globalization and market liberalization. Paper analyses performance of SOEs from the Republic of Slovenia and Bosnia and Herzegovina. To understands differences and similarities between SOEs from Bosnia and Herzegovina and Slovenia we have conducted a comparison analysis. Measuring the success of these SOEs is based on the analysis of financial statements for period from 2008 to 2012, using indicators of profitability and market indicators. The results reveal that SOEs from Bosnia and Herzegovina have poor governance and much lower performance than SOEs from Slovenia. The broad conclusion that emerges from the results is that government of Bosnia and Herzegovina has to conduct extensive reforms and reorganization of its S SOEs in order to survive and grow.
... For instance, Clarke and Wallsten (2002) found that while private sector participation in water service delivery leads to more supplies to poorer households, there may be offsetting service difficulties and higher charges when supplies are privatized. Similarly, an empirical study by Bayliss (2002) reported that privatization created negative impacts on the poor in terms of job losses, decreased earnings, and reduced access to services. Birdsall and Nellis (2003) found that privatization resulted in income disparity between people thus expanding the inequality gap between the rich and the poor. ...
... One group of authors support privatization and argue that it has positive impacts on company performance and country's economics development (Magginson and Netter, 2001;Vickers and Yarrow, 1995;Dewenter and Malatesta, 2001;D'Souza and Megginson, 1999 and others). On the other hand, other group of authors does not support privatization of strategically important enterprises and argue that privatization has negative impacts country's economics development and growth (Campbell-White and Bhatia, 1998;Bayliss, 2002 and others). ...
Article
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Competition in the automotive industry has become increasingly in challenging tandem with time and advances in technology. Based on this situation, it is important for Malaysia to be at the top of the advanced automotive manufacturers, especially among ASEAN members. Therefore, this study aimed to prove not only product innovation as a contributor to the success of the automotive industry, but also has its own role management. By using Green Lean Six Sigma practices (GLSS) as the independent variable, it can help bring about a transformation of management which can improve financial performance. The Structural Equation Modelling (SEM) has been proposed as conceptual model in this study. Based on proposed research model and literature review, a research hypothesis is being developed.
... They repeated the study later on 2002 for 16 African companies between 1989 and 1996. Bayliss (2002) has seen the complex part of the privatization process and argues in favor of case-by-case studies. There are studies focusing on the water sector such as case studies or pure empirical works. ...
Conference Paper
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A safe, clean, accessible and affordable drinking water and sanitation service for all individuals is a human right recognized explicitly from the United Nations General Assembly (Resolution 64/292, July 2010). Access to clean drinking water is so crucial for development that developed countries have made significant investments in water infrastructure (production, distribution investments in investments in piping, pumps, water purification systems and wastewater treatment plants etc.), managerial structures and capacities. The picture is very different in developing countries. One of the main problems is the lack of efficiency of the water systems, leading to a higher loss rate (from system leakage and illegal connections to the system) and cost-recovery failure because of the low revenues from tap water sales. In most of the cases governments fail to finance the financial loss of the water suppliers and in this way fail to fulfill the public need for drinking water and sanitation and water treatment services. So an alternative to solve the situation is seen the privatization of drinking water sector. The paper will give a summarized picture of the phenomenon in the world having as the case study the situation in Albania during years starting from the legislative frame, previous attempts to future tendencies related to the privatization of drinking water sector. The main objective is to explore the arguments pros and cons related to the privatization of "an economic good" such as water suggesting different alternatives in this context.
... Moreover, employment increases after privatization are rare and usually follow periods of large-scale retrenchment" (ILO, 1998, pp.1). There seems also to be evidence that privatization rises the disparity between pay levels within enterprises (Bayliss, 2002). However, at the aggregate national level the impact on poverty is small because in the EU countries the employees in energy sector represent just over 1% of all employees. ...
Preprint
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In the late 1990s many European countries started comprehensive restructuring of their energy industries, the typical ingredients of the reforms are full or partial privatization, vertical disintegration, liberalization. In this paper we focus on the way in which energy sector reforms affect social affordability. The aim of this paper is to analyze the effects of energy reforms on the household probability of experiencing utilities deprivation (that is, to be unable to pay scheduled utility bills) in seven European Countries: Denmark, and Spain. The period of analysis is 1994-2001. We also explore the dynamics of utilities deprivations focusing on the causes behind deprivation persistence. We differentiate between household heterogeneity and true state dependence. Then, controlling for observed and unobserved heterogeneity, we use the magnitude of average partial effects to investigate the relevance of any state dependence and the impact of energy sector reforms on the probability of experiencing utilities deprivations and on state dependence. We find evidence that vertical disintegration in the energy sector and privatization increase the household probability of experiencing utilities deprivation. Moreover, vertical disintegration also increases the household persistence in the status of deprivation.
... A concurrent trend in the water sector is the commercialization of service delivery (Bayliss, 2002;Gilbert, 2007) modeled on the principles of New Public Management. Reforms therefore aim to promote efficiency through organizational restructuring and the introduction of market mechanisms to deliver services and involve decentralized management instead of monolithic bureaucracies; performance management schemes; and contracting out services to non-state actors (Batley and Larbi, 2004). ...
Article
Decentralization reconfigures urban water governance by transferring responsibilities for service delivery to local institutions and expanding the role for non-state actors. Consequently, community-managed water supply projects exemplify a proliferation of participatory arrangements—typically those that promise capacity building in low-income communities to enable them to partner with the state in delivering basic services. Drawing on a cross-case analysis of how three such projects unfolded on the ground in India, I examine the coproduction of water supply—a manifestation of the shift in water governance. The findings delineate its role in (re)shaping local-level state-community relations and underscore implications for urban service delivery.
... Furthermore, some criticisms against the privatization process are based on the belief that the gains in firm profitability are achieved at the expense of society. These gains are claimed to be extracted from consumers through the use of market power (Bayliss 2002). The most serious concern with privatization, as it has so often been practiced, is corruption (Stiglitz 2002). ...
Article
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Privatization processes have characterized and changed the public sector in many European countries. However, often they ended up with partial privatizations. In these cases, public service providers, organized in the form of joint stock companies, are still owned by the State. Different theoretical perspectives – New Public Management (NPM), New Public Service (NPS), and New Public Governance (NPG) – are used to discuss this issue highlighting open questions on corruption, unethical behaviours and lack of accountability. Through a cross-country case study analysis, the main features of the Italian and the Norwegian privatization processes are shown. The findings call attention to the stop and go characteristic of the Italian process and the reluctance of the Norwegian government to privatize. Both countries have Ministries which are still the major owners of companies providing public services. Furthermore, although Ministerial governance has different development in Italy and Norway, common patterns exist when coming to ethical and accountability concerns. Networked modes of governance and accountability seem to be reasonable alternatives to the lacks generated by partial privatization processes.
... Around the turn of the century, the World Bank, the World Water Council and others advocated privatization models as the best way to manage 'scarce' goods and services efficiently. However others questioned their impacts on human wellbeing and people's basic rights, especially in the world's poorest countries (Bayliss 2002;Gleick, Wolff et al. 2002;Budds and McGranahan 2003;). ...
... This is a limited way of looking at distributional equity in the context of developing cities, because most water systems suffer from unreliable and intermittent supply (Kumar 1998). This means that water 1 Equity in the water sector, in peer-reviewed literature, is studied primarily in the context of privatization and effect of different pricing policies (Cooley and LaCivita 1979;Rogers, de Silva, and Bhatia 2002;Ruijs, Zimmermann, and van den Berg 2008;Barberán and Arbués 2009;Birdsall and Nellis 2003;Bayliss 2002). is provided only for a limited number of hours on a limited number of days, which can vary across regions, cities, and even within different parts of the same city. Hence, while the connection may exist, the water may not be safe or in quantities sufficient to meet basic health needs. ...
... According to Kayizzi-Mugerwa (2002), water privatization (and even the entire privatization paradigm) in Africa seems to have taken four main systematic routes -(i) slow privatization of small enterprises with no critical legal scrutiny which happened until the latter part of the 1980s; (ii) easy privatization of small enterprises, but resistance toward large enterprises -'path of least resistance'; (iii) eventual privatization of large enterprises, which happened in the mid-1990s and was characterized by some institutional and political resistances and (iv) fully accelerated and accepted privatization where utilities such as water were given up to large-scale private enterprises; though this is yet to reach many African countries, including Ghana. Bayliss (2002) has revealed that most of the privatization ventures are guided by the international donor community composed of the World Bank and others, although not all public sectors in Africa (for instance, Burkina Faso, Namibia and Botswana) have poor results in utility ownership and management as popularly spearheaded. The database of the Public Services International Research Unit (PSIRU) of University of Greenwich, UK reveals water privatization contracts, particularly in sub-Saharan Africa ranging from short term management contracts as in Uganda, Burkina Faso and South Africa with private entities such as Suez-Ondeo, Vivendi and Suez accordingly. ...
Article
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The water industry in Ghana has recently experienced a massive proprietary change, from its public monotonic system to a public–private system mixed with localized private participation options. Although these changes have contributed to local and national revenue generation, the consumption bracket continually de-equalizes due to inaccessibility and unavailability patterns of water provision. This has made water a scarce commodity for some, whilst others are over supplied and over satisfied. In this research, the manifestation of private sector participation in Ghana's urban water sector in the midst of the public water system and its implications on water supply have been investigated using both secondary and primary data. The study reveals significant deficiencies in urban water needs and wider inequality outcomes amongst urbanites despite government's neo-liberal interventions in the water sector. The major proposals include the need for re-alignment of private sector engagements characterized by proper state's regulatory control mechanisms and encouragement of community/neighborhood joint water supply systems to complement state and private interventions in order to reverse the access and consumption deficiencies in the urban water sector.
... This is a limited way of looking at distributional equity in the context of developing cities, because most water systems suffer from unreliable and intermittent supply (Kumar 1998). This means that water 1 Equity in the water sector, in peer-reviewed literature, is studied primarily in the context of privatization and effect of different pricing policies (Cooley and LaCivita 1979;Rogers, de Silva, and Bhatia 2002;Ruijs, Zimmermann, and van den Berg 2008;Barberán and Arbués 2009;Birdsall and Nellis 2003;Bayliss 2002). is provided only for a limited number of hours on a limited number of days, which can vary across regions, cities, and even within different parts of the same city. ...
... This is particularly true in countries in the South where private sector investment in essential services has not materialized as expected, and where resistance to privatization has been strong (Hall et al. 2005;Mansfield 2007;Spronk 2007). Private sector participation in services in Africa, Asia and Latin America has not disappeared, but governments and policy advisers such as the World Bank have become less bullish about the potential for private sector management and investment in core services, especially in lower-income countries where the investment risks are high (Bakker 2007;Bayliss 2002;Roland 2008). As Ramesh and Araral (2010: 1) note: 'States are back, hesitatingly, even unwillingly, and it is widely accepted that they have no option but to rescue the market from itself. ...
... This is particularly true in countries in the South where private sector investment in essential services has not materialized as expected, and where resistance to privatization has been strong (Hall et al. 2005;Mansfield 2007;Spronk 2007). Private sector participation in services in Africa, Asia and Latin America has not disappeared, but governments and policy advisers such as the World Bank have become less bullish about the potential for private sector management and investment in core services, especially in lower-income countries where the investment risks are high (Bakker 2007;Bayliss 2002;Roland 2008). As Ramesh and Araral (2010: 1) note: 'States are back, hesitatingly, even unwillingly, and it is widely accepted that they have no option but to rescue the market from itself. ...
Book
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After three decades of privatization and anti-state rhetoric, government ownership and public management are back in vogue. This book explores this rapidly growing trend towards ‘corporatization’ - public enterprises owned and operated by the state, with varying degrees of autonomy. If sometimes driven by neoliberal agendas, there exist examples of corporatization that could herald a brighter future for equity-oriented public services. Drawing on original case studies from Asia, Africa and Latin America, this book critically examines the histories, structures, ideologies and social impacts of corporatization in the water and electricity sectors, interrogating the extent to which it can move beyond commercial goals to deliver progressive public services. The first collection of its kind, Rethinking Corporatization and Public Services in the Global South offers rich empirical insight and theoretical depth into what has become one of the most important public policy shifts for essential services in the global South. ***Disponible en español: Servicios públicos en el Sur Global: Mirada a crítica a nuevas formas de gestión***
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Chapter
As discussed in the introductory chapter of this book, there has been a worldwide trend towards the privatization of state-owned companies in the water sector over the past two decades. Africa has been no exception to this phenomenon: under the aegis of the World Bank (WB) and the International Monetary Fund (IMF), many countries have privatized their water sectors. The primary justification for this reform was based on the idea that public ownership meant inefficiency and mismanagement and that the state could not inject the additional investments required. It was argued that with the status quo scenario with public management, the Millennium Development Goals (MDGs) of halving the number of people without access to potable water would not be achieved.
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This article offers a detailed view of key drivers for the wide-ranging economic reforms in the region during the 1990s, chiefly the Washington Consensus and the increased political stability. It highlights the key developments and results of the reforms in the areas of privatization (across industries), foreign investment and trade liberalization. It further provides insight into how the opening up of the regional economies resulted in multinationals penetrating and thereafter increasing their ownership of business across sectors, how, as a result, the public-sector share shrank during the period and how the local businesses adapted to this changed environment. The article also touches upon some key structural changes in the labour market as a result of the developments of the 1990s. This is followed by an exploration of the key themes and challenges facing the regional economies in the years ahead – economic, social and geo-political.
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Over the past decade, the Kenyan Government has undertaken several water sector reforms in an attempt to increase water access. The most recent of these reforms (2002) was the privatization of water through the creation of autonomous Water Service Providers (WSPs). Among other things, that reform was sold as necessary to achieving the Millennium Development Goals (MDGs) with respect to water and sanitation. This paper uses Data Envelopment Analysis to evaluate the progress of the WSPs towards achieving the MDGs by 2015. Based on data availability and reliability, 44 WSP were selected and analysed on various efficiency measures, including technical efficiency and scale efficiency. The findings reveal that all WSPs are operating at significantly below capacity and unlikely to meet the MDGs. Over 50% of small WSPs have achieved less than 30% of targets considered necessary for achieving the MDGs. We propose the use of peer benchmarks as a way of mitigating poor performance.
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The criteria we use to define a person are not irrelevant, and the point where we set the frontier of personhood is of crucial importance in determining the limits of interactions with others. This frontier determines whether our interactions are moral or merely technical. In a nutshell, harming someone else is wrongful only within the moral sphere. Outside that sphere, harm only raises technical issues regarding how we should cope with it. The purpose of this chapter is neither to defend a specific criterion and argue that a group should belong while another should not, nor to give an exhaustive view of all possible criteria and arguments for and against. Instead, it aims to showcase the most salient issues in business, with the aim of making the reader aware of the diversity of criteria and arguments in defining the moral agent. This chapter starts from the gravitation point in moral agency theory (the person) and explores the limits of different propositions for expanding this core category. The second section introduces debate over the issue of moral agency in business: the moral status of the corporation. The third section expands on this to analyze the moral status of the stakeholders who gravitate around the corporation.
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Large-scale land acquisitions, commonly known as “land grabbing,” are in most cases driven by the need for freshwater resources. There is evidence that corporations and governments are increasingly investing in agricultural land in order to meet the growing demand for food and biofuel. Since the production of both food and biofuels requires freshwater resources, land investors typically look for access to water. Large-scale land-related deals include unlimited water rights in favor of the investor, to the detriment of other users, especially local people, who lose their access to water despite the fact that access to water resources is a basic human right that cannot be denied. Moreover, most of these deals are closed with no, or very limited, consultation with local populations, and without fair compensation. Investors thus act with no consideration for the social and environmental impact of the land acquisition and water grabbing.
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Ensuring the provision of affordable housing is an important and challenging role of planning practice, both at macro and micro level. The adequacy of housing supply to the population’s (present and future) needs, preferences and income is particularly relevant and complex in territories where standard housing market mechanisms typically fail. In places, shaped by socio-economic vulnerabilities (such as high proportions of population with low income levels) and by severe demographic decline processes (associated with high levels of vacancy houses), the mismatch between the market drivers (e.g. demand and supply) and the efficient market conditions to produce affordable and good solutions for all population is a crucial issue in the context of public policy. Thus, a spatial composite indicator of housing accessibility, considered in this article as a combination of need and affordability, is developed. More specifically, the former is assessed by the balance between housing stock (supply) and number of households (demand), while the latter is captured by the equilibrium between housing price (supply) and household’s income conditions (demand).
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Often privatisation is perceived as a magic wand that would eliminate the ineffectiveness in service provisioning. But usually, this does not happen, especially in most economically, politically, and administratively weak countries of sub-Saharan Africa. The objective of this study is to interrogate the policy options towards managing post-privatisation challenges. Using historical data sourced from official documents, media clips, extant literature and other documentary sources, the paper examines the post-privatisation collaboration efforts of the Nigerian government to ensure the success of the privatisation of the electricity infrastructure. The author argues that privatisation should not be seen as a one-off conclusive activity in which the government divests from a privatised entity and at best merely regulates, but rather should be perceived as a continuous process of collaboration with the private sector through interventionist role of the government to improve and sustain service delivery to the citizens.
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In the past few years corporate governance rules, laws and practices have started to focus more on responsible board behavior as stakeholders required more transparency. Negative board dynamics have been observed as contributing to performance problems, damaging corporate behaviors and value destruction. This note provides an integrative viewpoint on board dynamics combining the key insights and concepts from the practical corporate governance literature, the behavioral economics and the neurosciences field into a comprehensive board dynamics framework. The aim is to help board members/advisors/strategy & governance committees to develop better board evaluation practices by grounding these in the available insights on board dynamics. The" lets-be-nice" or" fill-out-the-form" board evaluation practices are slowly changed in the boardroom to try to create boards that create long-term value.
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Significant stage of theoretical bases consideration of such a regional development instrument as noncommercial concession is a control system of the Russian Federation regions functions definition in new conditions. The specified functions will be almost identical for all regions, and differences can be caused only by the structures of its industrial complexes. The functions of regional and municipal governments, presented in a research, are received as a result of its activity law base analysis. Features of their realization in the conditions of noncommercial concession use are revealed. It is defined that the organizational structure of governments of subfederal and local levels will change not so significantly as filling of their activity and responsibility of particular persons. The functions specified in article are implemented within use of noncommercial concession by means of matrix and modular structure of regional and municipal governments use and creation on these basis the workgroups, which has the right of decision-making. The results received during this research will be used by consideration of other aspects of introduction and use of noncommercial concession. In spite of the fact that theoretical approbation of results, received during given and previous researches, is made on the basis of the Kostroma region, they have universal character and can be applied practically in any region of the Russian Federation after fine tuning under the structure of its industrial complex.
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This article explores the relationship between public sector employment and population health both theoretically and quantitatively. First, we build a theoretical framework to situate public employment in the literature that explores the link between politics and health. We argue that public employment, as an instrument of pro-redistributive policies in both the labor market and the welfare state, improves equality and ultimately health. Second, based on a cross-country dataset from the 1980s, and by applying regression analysis and outlier identification techniques, we find that population health measured by life expectancy improves with the size of public employment. The association is stronger for countries with lower income and for women. When policymakers contemplate downsizing state enterprises and government functions, they should consider the health effect of public employment.
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We assess the link between corporate social responsibility (CSR) and government ownership using a unique sample of privatized firms (PFs) from 41 countries over the 2002 to 2014 period. We find that PFs have, on average, better CSR intensity than other publicly listed firms. Further tests show a nonlinear relation between residual state ownership and CSR intensity that depends on the trade-off between political objectives of the government and profit maximization objectives of private owners. In addition, country-level institutions affect the state ownership–CSR intensity relation, and PFs benefit from higher valuation and lower equity financing costs through improved CSR.
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This paper analyses the relationship between government spending and the distribution of private income between capital and labour. While most previous research assumes that government spending redistributes in favour of the less wealthy, I distinguish between types of expenditures that enhance the bargaining position of labour – i.e. unemployment benefits, public sector employment and investment in new capital – and labour-saving and pro-business types of expenditures – i.e. outsourcing to private firms. The results are derived from various panel regression techniques on a panel of 19 OECD countries in the period 1985-2010 and show that expenditures on public sector employment and to a lesser extent on new capital prevented the private wage share from declining further, even after controlling for labour market institutions, globalisation and technological change. Conversely, expenditures on outsourcing substantially contributed to reducing the private wage share. Unemployment benefits had a non-significant and negative effect on the private wage share, because their increase was the consequence of higher levels of unemployment rather than policy. Implications for theory and policy are drawn, including the support for a public employment-led spending policy.
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Disagreements on moral personhood do not entirely exhaust the moral issues in business, and an important aspect of these relates to disagreements over interpretations of ‘ownership.’ Can—and should—a firm own the air, water, body parts, an idea, a font, or a color? The answers to these questions depend on how we understand ownership. The concept of ‘ownership’ is used here to refer to legitimate full control of resources. This conception of property implies that owners have the right to use resources at will and that their choices are protected by their property rights—i.e., they have the right to exclude others from such use if they wish. Thus, property rights also play a crucial role in assessing the morality of a transaction. Only after determining whether property rights were respected can we establish whether a transfer of resources is a commercial transaction or a theft. Ownership is particularly relevant for moral assessments of business activities because it raises several crucial questions: Can everything be owned? Who should have ownership? How should resources be managed? Providing precise answers to these questions is fundamental to moral assessments of business. This chapter aims to address the key moral controversies in business in relation to ownership. The first section details discussions about the limits of commodification. The second examines the key matter of who should own things, focusing on the debate over private and public ownership. Finally, the third concludes with a consideration of the debate over how things should be managed.
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In the opening scene of the Italian movie Ricomincio da tre (1981), Massimo Troisi abruptly says, ‘I want to leave everything behind and start from three!’ Lello Arena retorts in response, correcting his statement: ‘From zero. The habitual formula is: “I start from zero” not “from three.”’ Incredulous, Troisi explains that he has only made three good things in his life: why should he lose them too by starting from zero? Using this humorous dialog, a simple way to conclude this book would be to say that we do not need to start from zero in building our conception of morality and apply it to choices in business: we can start from these four concepts: personhood, ownership, harm, and consent. It is at the level of these four concepts that our conception of morality is shaped and, conversely, debates on business ethics can be explained by disagreements on each of these four points.
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As outlined in the introduction, business opportunities and moral choices are often intertwined. Managerial decisions have financial and legal constraints; they also have to take moral issues into account. While it is difficult to say precisely what these constraints are and the order of priority in which they should be dealt with, or which (if any) should be considered subordinate to the others, we can simply admit that the sphere of management is not ‘moral-proof’ and that the office is not a haven from moral issues. To substantiate this idea, the aim of this chapter is to show that moral choices are an inescapable feature of business activity. Following up the ideas sketched in the introduction, the first section shows that moral choices are inevitably embedded in business practice. The second assesses the limits of this plurality of moral choices by addressing the widespread relativistic challenge to the distinction between right and wrong: ‘anything goes in business.’ The third section identifies the key moral bottom lines in business: personhood, ownership, harm and consent.
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‘Consent’ is the cornerstone of morality in general, and more particularly of assessing the morality of business practices, given that they are defined as contractual. Consent is a key moral bottom line because it allows us to tell apart wrongful from morally acceptable interactions. Consent among parties is essential for a moral assessment of a harmful situation not only in business but also in almost all types of interaction. The same transfer of ownership from one person to another is not judged through the same moral lens if it is done voluntarily or through coercive means. The former case is generally called ‘cooperation’ and the latter ‘theft.’ The same goes for physical harm. An action involving physical violence, unanimously considered harmful, becomes morally acceptable when all parties involved give consent, such as in a boxing match or surgical intervention. That being said, this large agreement that consent is essential to determine the morality of a harmful interaction encloses fundamental disagreements concerning the precise definition of both ‘harm’ and ‘consent.’ Scholars and practitioners—but also citizens in general—are profoundly divided on the meanings of harm and consent, as they would not all locate the frontier between harmful and harmless and/or between consensual and non-consensual managerial practices in the same place. This chapter sets out a general survey of radically different conceptions of harm and consent, with the aim of showing how they shape moral assessments of business activities. The first section focuses on different approaches to harm and the next two on consent: the second more specifically on the conditions in which consent is formulated and the third on informed consent.
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Nigeria's persistent economic stagnation is attributable to a mutually reinforcing political dynamic, comprising a weak developmental state and pervasive rent-seeking within the private sector. This syndrome was a source of Nigeria's initial economic crisis in the early 1980s, and it continues to impede structural adjustment initiatives. Economic policy reform has been compromised by state strategies designed to preserve the gains of elite rentier groups, while private entrepreneurs have responded to policy change by seeking new rental havens in finance and other nontradable sectors. In consequence, structural adjustment has failed to elicit a supply response or to generate significant political support for a more propitious enabling environment. Nigeria's experience reinforces the perception that changes in nominal incentives must be accompanied by broader institutional transformation if economic reform is to be effective.