Publication: A Retrospective on the Mexican Toll Road Program (1989-94)
Date
1997-09
ISSN
Published
1997-09
Author(s)
Ruster, Jeff
Abstract
Mexico's private toll road program
more than doubled the national toll road network from 1989
to 1994. The investment of approximately US$13 billion in
the program was sourced from local commercial bank debt,
concessionaire equity, and federal and state government
grants and equity contribution. However, gross
miscalculation of investment costs and operating income led
to an unsustainable set of operating conditions for these
limited recourse financings. The financial equilibrium of
the sector was further undermined by the Mexican currency
crisis of December 1994. All these brought the project
development to a standstill and resulted in widespread
financial and economic repercussions. Some industry
observers have characterized the toll road program as a
poorly designed effort to develop the infrastructure the
country needed to compete effectively in an era of free
trade. From a private investment perspective the impact was
to shut off capital flows to the sector and to add to the
Mexican banking system s non-performing loan portfolio. This
Note presents a diagnostic of key policy, regulatory, and
institutional gaps that undermined the financial equilibrium
of the sector. A checklist of recurrent problems illustrates
how the failure to address these issues manifested itself in
the course of implementation.
Citation
“Ruster, Jeff. 1997. A Retrospective on the Mexican Toll Road Program (1989-94). Viewpoint: Public Policy for the Private Sector; Note No. 125. © World Bank, Washington, DC. http://openknowledge.worldbank.org/entities/publication/88b55114-8dc9-53aa-9301-34a961e82731 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.