The Distributive Impact of Privatization in Latin America: Evidence from Four Countries

The supposed failure of privatization in Latin America has recently become the source of street riots, protest demonstrations, and adverse news coverage. Riots in Arequipa, Peru, erupted in June 2002 following the announcement of a proposal to privatize power plants, while Cochabamba, Bolivia, witnessed a so-called water war in April 2000. Antiprivatization protests also occurred recently in Ecuador and Paraguay, while water privatizations in Lima and Rio de Janeiro had to be cancelled owing to popular opposition. Street protests by antiglobalization activists have included privatization as a prime target, on the grounds that national values should not be overtaken by the profit calculus of global capitalism. News articles highlight popular objections to private enterprise making a profit on basic services such as water, the failure of water privatization in Bolivia, and problems with quality, price increases, and large-scale employee layoffs. In response to popular opposition, the National Assembly in Nicaragua passed a law forbidding the privatization of any enterprise related to the provision of water services (a law later vetoed by the country’s president). These adverse opinions are not restricted to a handful of protesters. Latinobarometer opinion polls for 2000 show that a clear majority disapprove of the privatization process, a pattern that is uniform across countries, age, gender, and socioeconomic class. The