Results of Railway Privatization in Latin America

This paper reviews the performance of
railway concessions in Latin America over the period
extending from the initial Argentina concessions in
1991-1993 through 2004. The bulk of the concessioning
processes described herein were supported by the World Bank.
Now over a decade since rail concessioning in Latin America
began, the overall assessment of its results is positive,
particularly for freight railways. Railway traffic volumes
have climbed, with some improvements in surface transport
market share. Although numerous data problems exist,
measures of productive efficiency almost uniformly show
post-concession improvements in cargo transport. Effects on
rail rates and service levels have generally received
positive reviews. Evidence is less extensive for passenger
services, mostly because concessioning was largely limited
to commuter services in Argentina and Brazil and because
such concessions must be evaluated in terms of complex
subsidy and regulated pricing regimes, rather than as
market-based private enterprises. Railway concessions have
not revived uneconomic intercity passenger services, nor has
there been much effort to do so. iii. While concessioning
brought impressive improvements in labor productivity and
other efficiency measures, results have been not quite as
dramatic as they are sometimes portrayed. This is in part
because the initial concessions took place in the volatile
Argentina economy, where a precipitous decline in the rail
sector just prior to concessioning was followed by a
dramatic post-concession revival. Elsewhere the decline in
the rail sector was not as severe as in Argentina, nor was
the recovery so rapid.