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DIFFERENCE BETWEEN PRIVATIZATION IN
BRAZIL AND MEXICO
Presented by:Sarang Gaikwad
ESSCA BSP 2010
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CONTENTS
Brazil
Trade Liberalization
Components
Sector-wise privatization FDI Inflows
Mexico
Trade Liberalization
Components
Conclusion
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BRAZIL
Introduction
From the early 1990s through 2007, Brazils
privatizations realized USD 87.9 billion in sales
revenue and another USD 18.1 billion in debttransfer.
Foreign investment has played a significant role
in Brazils privatization programs.
Foreign investment accounted for about USD 42.0
billion, or 48 percent of the total.
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OBJECTIVES
To redefine states role from supplier to regulator
To create a competitive environment by granting
public service commissions.
To direct federal governments efforts andresources to
Health Education, housing, public security and
R & D
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COMPONENTS
The Brazilian privatization program has three
components:
(a) the federal National Program of Destatization
(NPD), which started in 1991;(b) similar programs at the state level, which began
in 1996; and
(c) the privatization program of the
telecommunications industry
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RESTRUCTURING THE STATES
Modernization of tax collection systems and
expenditure Controls
Downsizing of civil servant contingent
Privatization and public services concessions Agreement to a targeted fiscal revenue
Reduction or spreading out of states indebtedness
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SECTORS PRIVATIZED
Stage I:
Industry Steel
Petrochemicals
Fertilizers
Mining (CVRD - 1997)
Stage II:
Infrastructure Railroads
Telecommunications
The major privatization: Vale do Rio Doce(1997);EMBRAER(1994); Telebras(1998)
a
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SECTOR-WISE DISTRIBUTION OF AUCTIONS
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FDI AS % OF GDP
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MEXICO
Economic crisis of 1982 due to external debt
Had to leave behind domestic interest and tight
Foreign investment
Began with nationalization of bank
Securities investment boom an offspring of crisis
Mexico stood 4th in world in the amount of
revenues gained from sale of public enterprises
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PRIVATIZATION PROGRAM
Three points of Mexicos privatization program were:
(1) The withdrawal of the federal government from
production of goods and services;
(2) The effect of privatization on the federalgovernments financial affairs; and
(3) The speed at which privatization was carried out.
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SECTORS PRIVATIZED
Stage I
Banks
Airlines
Energy Telecommunications
Sugar
Stage II
Steel
Railway
a
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FDI INFLOWS
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CONCLUSION
The condition for the privatization were different
in both the countries
The long-term benefits of these privatization
endeavors have far outweighed any costs incurred Unable to attain full potential of privatization.
Latin American people view privatization of
industries as at least a partial failure.
Temporary reduction in employment levels--the
typical short-term cost of privatization--
aggravates citizens' negative feelings.
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