Does Private Sector Participation Improve Performance in Electricity and Water Distribution?

Does Private Sector Participation (PSP) Improve Performance in Electricity and Water Distribution? This question has proven deceptively difficult to answer in the context of utilities in developing economies. The authors examine the question of private versus public performance in a natural monopoly setting. They address the shortfalls of earlier research and arrive at fact-based conclusions that are robust globally. Using a data set of more than 1,200 utilities in 71 developing and transition economies-the largest known data set in the area-this study finds that privately operated utilities convincingly outperform state-run ones in operational performance and labor productivity.