The political economy of telecommunication reform in developing countries: Privatization and liberalization in comparative perspective

Developing countries have begun a historical process of reform in their telecommunications sector. Most share a common goal: the privatization of state-owned telecommunications enterprises and the liberalization of the telecom market. Yet, not all these countries have been successful in efforts to sell their telecom firms and to open their markets to competitive entry. Outcomes have diverged considerably. This raises the question: Why do countries with shared telecom reform goals and similar patterns of development achieve such different results?;Supported by evidence in the existing literature on policy-making and on the experience of Latin American and Southeast Asian countries, this study argues that privatization initiatives are more likely to succeed where there is a high degree of state autonomy and high levels of power concentration within the state apparatus than in cases where these elements are less prominent. This conclusion contradicts a similar study carried out on telecom reform in the European Community. This dissertation argues that to understand the divergent role of political institutions in worldwide telecom restructuring one has to pay attention to the source of the reform initiative vis-a-vis the policy-making bodies of each country.;In regard to liberalization, this dissertation claims that it is not politics but economics that drives success or failure of telecom reform initiatives. The status of the domestic economy at the moment of privatization and how investors assess its telecom market prospects are key variables affecting the ability of governments to achieve intended market liberalization.;Finally, the socioeconomic impact of telecom reform is examined in regard to various groups related to the sector, such as users, labor, the state, new service providers, and traditional equipment suppliers. Evidence points to a picture in which gains and losses are distributed in a mixed fashion among the groups. It is undeniable, however, that most often changes in the sector benefit the new providers and harm the users of telecommunications services.