4
frequently undermined and the benefits intended for the poor, diverted. By
strengthening governance and institutional frameworks, the linkages between
infrastructure and poverty reduction can be made stronger.
PRIVITIZATION AND ITS DISCONTENTS
1. Investments in infrastructure by multilateral organizations as a percentage of their
investment portfolio diminished during the 1990s (Figure 1 & 2.). This change
was motivated by a consensus that capital shortage was not the main inadequacy
in developing countries and that institutions to improve governance and to reduce
corruption were necessary before capital investments could be productively
employed.
2. Privatization is a pillar of the Washington Consensus that dominated much of
development practice in the 1990s.
The new view placed markets where
governments had failed, and prompted many countries to undertake the extensive
privatization of infrastructure, previously funded and managed by governments.
During the 1990s more than 2,300 private infrastructure projects were
implemented in developing regions, totaling $690 billion. Nevertheless some 1.2
billion people currently lack drinkable water, 2.4 billion lack access to adequate
sanitation and more than 2.5 billion lack modern energy supplies.
3. The history of privatization is closely linked to the need to balance the budgets
and limit the public debt of developing and transitional economies.
Fiscal
austerity and the need to curb debilitating deficits resulted in higher prices for
many public utilities.
This helped to make privatization unpopular and forced
Convention