DIFFERENCE BETWEEN PRIVATIZATION IN BRAZIL AND MEXICO

Presented by: Sarang Gaikwad ESSCA BSP 2010

CONTENTS
Brazil
Trade Liberalization Components Sector-wise privatization FDI Inflows

Mexico
Trade Liberalization Components

Conclusion

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 debt transfer. 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.

OBJECTIVES
To redefine states role from supplier to regulator To create a competitive environment by granting public service commissions. To direct federal governments efforts and resources to
Health Education, housing, public security and R&D

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

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

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

SECTOR-WISE DISTRIBUTION OF AUCTIONS

FDI AS % OF GDP

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

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 federal governments financial affairs; and (3) The speed at which privatization was carried out.

SECTORS PRIVATIZED
Stage I
Banks Airlines Energy Telecommunications Sugar

Stage II
Steel Railway
a

FDI INFLOWS

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.

REFERENCES
(n.d.). Retrieved June 03, 2010, from http://inter.bndes.gov.br/english: http://inter.bndes.gov.br/english/bndes/brazpriv.pdf (n.d.). Retrieved June 03, 2010, from http://www.iadb.org: http://www.iadb.org/res/publications/pubfiles/pubwp-513.pdf (n.d.). Retrieved June 03, 2010, from http://www.ide.go.jp: http://www.ide.go.jp/English/Publish/Periodicals/De/pdf/96_01_02. pdf FDI Net - Countries - Brazil. (n.d.). Retrieved June 03, 2010, from http://www.fdi.net: http://www.fdi.net/documents/WorldBank/databases/plink/soceco/ 11brazil.htm FDI Net - Countries - Mexico. (n.d.). Retrieved June 03, 2010, from http://www.fdi.net/documents/WorldBank/databases/plink/soceco/ 9mexico.htm: http://www.fdi.net/documents/WorldBank/databases/plink/soceco/ 9mexico.htm