Why Is Sector Reform so Unpopular in Latin America?

Anyone contemplating sector reform in Latin America may wonder: Why is it so unpopular? Privatization-a reasonable proxy for sector reform more broadly - is widely disliked. Opinion polls by Latinobarometro (2002) find that approximately 70% of respondents disagree or strongly disagree that the privatization of state companies has been beneficial to their country. Country surveys of Argentina and Peru reach the same conclusion. Public protests have led to cancellations of projects to privatize infrastructure in Argentina, Bolivia, Brazil, Costa Rica, Panama, and Peru, among others. Negative views about privatization have increased over time as experience with reform has lengthened. Country studies suggest that Latin Americans' perceptions of privatization have been strongly shaped by privatizations of infrastructure, which made up more than half of all privatizations from 1990 to 2000 (Nellis 2003), and that they are reactions not just to ownership change but to the combination of cost-recovery pricing, tariff rebalancing, legal reform, regulatory restructuring, market liberalization, and other changes that constitute sector reform.