Sustainability of Reform in Central America: Market Convergence and Regional Integration

The 1990s was the decade of privatization and deregulation. Although the strategy was largely pioneered in the mature Western economies, the notion that liberalization could improve economic efficiency and at the same time generate income streams that could alleviate fiscal imbalances was rapidly extended to developing countries. Private sector investors would pay to acquire publicly owned assets and at the same time take over certain of the government’s obligations. A regulatory framework that enabled market forces to deliver efficient decisions in competitive market sectors and simulated market forces in monopolistic ones would ensure that these obligations continued to be responsibly met. As the decade progressed, the concept of energy market liberalization was embraced by governments, businesspersons, consultants and lending agencies across the world as a cornerstone of economic policy. Such was the enthusiasm for liberalization that the question of whether it was in fact an appropriate policy for all countries, whatever their circumstances, was sometimes overlooked or at least glossed over.