Globalization, Development and Privatization: What's the Question, What's the Answer?

Globalization, Development and Privatization: What's the Question, What's the Answer?

Globalization , development, and privatization : taken alone, each term has so many meanings that trying to put them together as a model of reality or a theory of global change quickly risks subtextual confusion. Those who examine these terms must decide clearly in advance why these are their topics of choice, what questions they ask, how they propose to frame them, and what sorts of questions they propose to answer. This is necessary to reduce readers' confusion over a given commentator's viewpoint, although it will not lessen conflicts among commentators. This review focuses on the perspectives of the four authors or editors whose works comprise the focus of this review: Basañes, Uribe, and Willig; Ali Farazmand; Graeme Hodge; and Ankie Hoogvelt.

Why Choose These Topics?

Hoogvelt, a political economist and lecturer at the London School of Economics, answers this question in terms that are broad and clear. For him, globalization and development are critical issues today because global poverty is severe, and getting worse. "The United Nations' Human Development Report, 1999, notes that between 1980 and 1996 gross national product (GNP) per capita declined in no less than fifty-nine countries. It reports that the income gap between the fifth of the world's population living in the richest countries, and the fifth in the poorest widened from 30 to 1 in 1960 to 74 to 1 in 1997" (p. xiii).

The other three commentators' scope of inquiry is, by comparison, more narrowly focused on ways that governments can use one specific mechanism—privatization of state-run programs—to reduce costs and increase effectiveness and responsiveness to citizens. The promise of privatization is that, by reducing costs and increasing program effectiveness and responsiveness to citizens, governments can better address demands for economic growth. Yet this narrower focus does not imply anything about the quality of scholarship; and indeed, it often makes an author's line of argument clearer and documentation more thorough.

The first of these, the reader edited by Federico Basañes, Evamaria Uribe, and Robert Willig (1999) and distributed by The Johns Hopkins University Press, is published by the Interamerican Development Bank (IADB), a major international lending institution dedicated to macroeconomic growth and development in Latin America. The book's focus, broadly speaking, is to examine

. . . the roles played by Latin American legal and governmental systems and structures in the design and workings of privatization instruments. . . . While there are features of the economic and political environment that can constrain institutional design and performance, there are also reforms, policies and types of concession and privatization contracts that can mitigate or eliminate some of the obstacles to successful privat-ization. (p. 1)

It grew out of an IADB-sponsored conference (1997) on "Private Investment, Infrastructure Reform and Governance in Latin America and the Caribbean," with contributors' presentations and other writings being compiled into an edited volume. The authors are a distinguished group of analysts from public and private sectors, academia (chiefly economists), banks, and multinational institutions whose careers focus on using private investment, with government assistance, to increase infrastructure development.

The second contribution focusing on privatization is Graeme Hodge's assessment of privatization outcomes. Whereas the IADB reader focuses specifically on privatization as a tool for economic infrastructure development, Hodge's work addresses a broader range of underlying issues; it examines comparative case studies worldwide rather than focusing entirely on Latin America and the Caribbean. It evaluates privatization along a broader...