11 State-owned enterprises, privatization and public-private partnerships
Infrastructure is a critical driver of economic growth and can significantly raise living standards. In the developing world, where basic infrastructure such as transportation networks, electricity generation and distribution, water distribution, and telecommunication systems are often lacking, infrastructural investment is widely viewed as an urgent priority. For developing country governments, infrastructural projects test government budgetary, technological and institutional capacity.
The most recent estimate for Africa pegs infrastructural needs at US$93 billion per year, or 15 per cent of the continent’s annual GDP – more than double the current rate of investment. Just under half of the need is in the electricity sector, followed by water and sanitation.2 The Middle East and North African region faces an annual infrastructural need of US$206 billion (close to 7 per cent of GDP), mainly in transportation and electricity.3 Meeting the infrastructural gap in Latin American and the Caribbean would require countries in the region to boost investment as a share of GDP from the current rate of 2 per cent to 5.2 per cent (principally in the transportation and water infrastructure sectors).4 Electricity and transportation represent the bulk of infrastructural needs in Asia, which total over US$825 billion annually.5 Across the developing world, electricity and transport make up over 80 per cent of infrastructural needs.
How might these infrastructural needs be met? In the 1980s and 1990s a wave of privatizations swept the world as the answer to these problems. State-owned enterprises (SOEs) in many countries were...
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