Micro- and Macroeconomic impacts of infrastructure privatization in developing countries: a review of the empirical evidence

Whereas the debate regarding the efficiency of privatization in developing countries (DCs) is far to be closed, the World Bank still prescribes intensively this policy, especially in the infrastructure sectors of DCs. In this context, this paper questions the efficiency of infrastructure privatization policies. Through a survey of the empirical literature (more than 60 studies), it provides an exhaustive assessment of the effects of these policies. Overall results show that microeconomic effects of infrastructure privatization in DCs are mixed and that macroeconomic impacts are largely disappointing because they do not comply with the targeted goals. More precisely, it appears that the efficiency of infrastructure privatization closely depends on the income level of developing countries. This reflects the impact of the quality of the economic, political and institutional environment. In particular, the presence of an independent regulation agency and the corruption level are major determinants of the success of infrastructure privatization.