Public Infrastructure Performance in Developing Countries

Book excerpt: This title was first published in 2000: An investigation of the performance of the electric power and telecommunication sectors of Pakistan at the firm level as well as the sector as a whole, seeking to identify and quantify the extent of inefficiencies. Since physical or financial or productivity indicators alone are not able to explain the duality of public infrastructure purposes, the financial and productivity indicators have been used in evaluating the performance of these sectors. Further, a Cobb-Douglas production function has also been used to calculate the trend in the growth of total factor productivity. Economies of scale have also been studied in the case of electric power generation. The results of the study show that in Pakistan one of the usual motives for privatization (to avoid the poor financial results of state enterprises) is not relevant for electricity and telecommunications enterprises. This, however, appears to be due to the financial subsidies they received, through access to low cost loan finance and grants, rather than to their efficiency in operations. By the economic criteria of growth of TFP none of the enterprises do well and two have a negative TFP growth. The case for reforming these enterprises is strong and alternative modes of organization, finance and ownership need to be considered.