In their book "The political economy of power sector reform", Dr. D.Victor and Dr. T.Heller have summarized very well the experience of five developing countries (Brazil, China, India, Mexico and South Africa) with power sector reform. The lessons learned are applicable not only to developing countries, but developed countries, too.
The textbook model was not applied anywhere. Hybrid models emerged crafted around the specific peculiarities of each country. These models are not viewed by the authors as temporary (transient) leading to the textbook model, but rather as stable equilibrium outcomes".
"Dual firms" emerged and continue to play a key role.
Factors outside the power sector are critical, too; key among them are: the legal system ("rule of law") and weak institutions.
Outside the scope of this book is the effectiveness of power sector reform in developed countries. While there are isolated success stories (Wales, UK and Chile), in most cases reform has faced many obstacles and has not resulted in meaningful competition leading to lower prices for consumers.
Subscribe to:
Post Comments (Atom)
1 comment:
While I am agreeing with Victor and Heller's thesis that cookie cutter approach towards power sector reform is not very useful, I think that their choice of the term "standard textbook model" is rather unfortunate. Theories contained in textbooks are very useful. It is not a question whether we should apply them. It's a question how we should apply them. Too often, the (initial) focus of any power sector reform is with macrostructure, i.e. whether to unbundle, whether to privatise and whether to set up an "independent" regulatory agency. Not enough attention is paid to the microstructure - the rules of the game. This brings me to the matter of "dual firms". It is not important who own the firms, i.e. the governments or the private sector. It is important how the firms are owned. The lack of hard budget constraints can be as much of a problem in poorly governed sector companies as in poorly governed state-owned enterprises.
Post a Comment