Engel E., Fischer R., Galetovic A. (2003).

Privatizing Highways in Latin America: Fixing What Went Wrong. Economia, the Journal of Lacea, vol.4, 129-164.


Argentina, Brazil, Chile, Colombia, and Mexico, were privatized using build-operate-and-transfer (BOT) contracts. The so-called lost decade of the 1980s resulted in low investment in infrastructure and inadequate maintenance, and it created a major highway deficit across Latin America. This deficit, together with chronic budgetary problems, led governments to embrace a scheme in which the private sector financed urgently needed infrastructure investments, thereby freeing up public resources for projects in other priority areas. 1 This paper draws some lessons based on the evidence accumulated to date. In particular, we show that policymakers face unpleasant choices when considering how to provide highways in the future. The evidence suggests that private financing of new highways freed up fewer resources than expected. In several cases, public funds were diverted to bail out franchise holders in financial …

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