Publication: Privatization by Capitalization : The Case of Bolivia - A Popular Participation Recipe for Cash-Starved SOEs
Date
1994-11
ISSN
Published
1994-11
Author(s)
Ewing, Andrew
Goldmark, Susan
Abstract
While campaigning for the 1993
presidential election, Gonzalo Sanchez de Lozada proposed
the unique Bolivian model of capitalization -- "Plan de
Todos" (Plan for everyone)--for six large state
enterprises in key sectors. The enterprises would be offered
for sale by international tender. The successful bidder
would pay the agreed price not to the government, but into
the company itself. The cash would be used for investment in
the sector. Initially the investor and the government would
hold equal, 50 percent stakes in the new company. The
government would immediately give its share in equal parts
to all adult Bolivians by endowing "pension
accounts" set up for each adult citizen. A 50 percent
stake in a company is usually enough to ensure management
control. However, to avoid any uncertainty and the risk of a
negative impact on the selling price, the capitalization law
proposes that a management contract be given to the
strategic investor for a fixed period of time. After that
time, the investors would be able to buy shares in open
markets to increase the shareholding beyond 50 percent.
Sanchez de Lozada won the election in July 1993. With the
help of World Bank advisors, he has been working to make
this capitalization concept a reality. However, it has run
into many of the thorny issues associated with traditional
privatization schemes. This Note describes the key
capitalization issues during the process.
Citation
“Ewing, Andrew; Goldmark, Susan. 1994. Privatization by Capitalization : The Case of Bolivia - A Popular Participation Recipe for Cash-Starved SOEs. Viewpoint. © World Bank, Washington, DC. http://openknowledge.worldbank.org/entities/publication/86eb2a5e-6cd1-5e31-b47a-3ef5c7d800d2 License: CC BY 3.0 IGO.”
Report Series
Report Series
Other publications in this report series
-
PublicationInvestment Climate in Africa(World Bank, Washington, DC, 2015-07-01)The World Bank Group has been working on investment climate reform in Sub-Saharan Africa for nearly a decade, a period characterized by dramatic economic growth on the continent. Establishing links between such reform interventions and economic growth, however, is a complex problem. Although this note finds some connection between investment climate reform and economic growth, establishing more concrete evidence of causation will require greater focus at the country level, as well as on small and medium enterprises. This is where investment climate interventions generate change.
-
PublicationExport Competitiveness: Why Domestic Market Competition Matters(World Bank, Washington, DC, 2015-06)This review of the empirical literature shows that industries with more intense domestic competition will export more. Competition law enforcement can be traced to export performance and is complementary to trade reforms. Pro-competition market regulation that reduces restrictions and promotes competition, where it is viable, is an important determinant for trade. The elimination of barriers to entry and rivalry, and a level playing field in upstream sectors contributes to export competitiveness in downstream manufacturing sectors. In some sectors, effective competition policy can directly lower trade costs.
-
PublicationPrimary Care for the Poor: The Potential of Micro-Health Markets to Improve Care( 2015-01)Much of the primary curative care provided to the poor by the private sector occurs not at large hospitals but at small, single-person clinics. While such micro-health providers increase access, questions persist about quality. Some have argued that the micro-health sector needs to be better regulated. This note cites recent studies in arguing that the micro-health sector needs to be better understood. A more evidence based approach may enable the World Bank Group to better target investments and interventions and help these providers fulfill an important role serving the poor. The following recommendations are made at the conclusion of this paper: (1) Effort, rather than hardware or training, may count the most. (2) Scaling up interventions to improve quality requires understanding and addressing market failures. (3) Changing the way impacts are measured will lead to smarter investments.
-
PublicationSmall Business Tax Regimes(World Bank, Washington, DC, 2016-02)Simplified tax regimes for micro and small enterprises in developing countries are intended to facilitate voluntary tax compliance. However, survey evidence suggests that small business taxation based on simplified bookkeeping or turnover is sometimes perceived as too complex for microenterprises in countries with high illiteracy levels. Very simple fixed tax regimes not requiring any books or records tend to be overly popular but prone to abuse. System reforms will require more precise tailoring of the simplified regimes to their target beneficiaries, coupled with strong compliance management to detect and deter abuse. The overall objective of simplified taxation for micro and small enterprises (MSEs) in developing countries is generally to facilitate voluntary tax compliance and remove obstacles in moving toward business formalization and growth.
-
PublicationCompetition and Poverty(World Bank, Washington, DC, 2016-04)A literature review shows competition policy reforms can deliver benefits for the poorest households and improve income distribution. A lack of competition in food markets hurts the poorest households the most. Competition in input markets and between buyers helps farmers and small businesses. And more competitive markets bolster job growth over the longer term. More research is needed, however, to better understand the impact of competition reforms and antitrust enforcement on poverty and shared prosperity.