A policy note on telecommunications reform in Algeria

By the end of the 1990s, most industrial and many developing countries had liberalized their telecommunications markets to improve service accessibility and affordability for both businesses and households. In contrast, Algeria still managed its telecommunications sector as public property. The Ministry of Post and Telecommunications set the policy, enforced regulation, and was in charge of service provision. The sector suffered from huge supply shortages, the waiting list lengthened, the quality of service deteriorated and unbalanced the overall fiscal situation. In 1999, a new government appointed in the aftermath of President Bouteflika's election decided to change the situation and launched a comprehensive sector reform. Um reviews progress made in implementing this reform, discusses its preliminary impact, and comments on the main lessons learned. The author shows that by restraining arbitrary administrative action during the reform implementation, the government of Algeria laid the foundation for sustainable growth in the telecommunications sector.Telecommunications Infrastructure,Rural Communications,Knowledge Economy,ICT Policy and Strategies,Enterprise Development&Reform,ICT Policy and Strategies,Telecommunications Infrastructure,National Governance,Rural Communications,Public Sector Economics&Finance

Is the level of financial sector development a key determinant of private investment in the power sector?

TThis paper seeks to assess the extent to which a country’s overall level of development and that of its financial sector, in particular, are factors that attract private capital into infrastructure projects. The authors investigate these effects in a 1990–2007 dataset on the power sector in 37 developing countries. The results suggest that economic growth is a key determinant of private investors’ investment in infrastructure projects, and that investors tend to take countries’ governance quality into account in their decisions to invest. The empirical results highlight that the development of the financial sector also plays a significant role in private investors’ decisions to enter infrastructure sectors. In particular, the degree of country risk and exchange rate volatility is found to be negatively This paper—a product of the Sustainable Development Department, Middle East and North Africa Region—is part of a larger effort in the department to promote infrastructure development in client countries through applied research targeting cutting-edge policy, regulatory and infrastructure finance issues. Policy Research Working Papers are also posted on the Web at http://econ.worldbank.org. The author may be contacted at [email protected]. related to the volume of private sector investment in power projects. Furthermore, when the banking sector and the capital market are separately treated in the analysis, the existence of a well functioning capital market is the main attracting factor. In addition, the existence of an independent energy regulatory authority significantly improves the level of private investors’ implication in energy projects. When accounting for the interactions between the overall economic development and the financial sector development variables, the effects of these variables are still significant and the results also confirm the importance of an independent energy sector regulator.Infrastructure sectors, Public-private partnership, Power sector, Financial development, Economic growth

The Role of Institutional Design in the Conduct of Infrastructure Industry Reforms - An Illustration through Telecommunications in Developing Countries

This paper is concerned with the role of political and economic institutions in the conduct of the infrastructure industries reform process in developing countries. Our point of departure is that the specific features of these countries' economies should be accounted for when considering policy design. We discuss the main results and policy lessons drawn from two studies of the telecommunications sector based on an econometric analysis of time-series-cross-sectional data on developed and developing countries. We synthesise the main empirical findings and policy implications pertaining to two issues. The first issue concerns the impact of the quality of institutions on the function of regulation. Our review points to the fact that political accountability of institutional systems is a key determinant of regulatory performance, in particular in developing countries. The second issue relates to the factors that shape the sectoral reforms themselves and the impact of these reforms on the development of the industry in developing countries. Our main conclusion is that countries' institutional risk and financial constraints are among the major factors that explain which reforms are actually implemented.Political accountability, reforms, infrastructure industries, developing countries

Infrastructure and economic growth in the Middle East and North Africa

This paper analyzes the impact of infrastructure on growth of total factor productivity and per capita income, using both growth accounting techniques and cross-country growth regressions. The two econometric techniques yield some consistent and some different results. Regressions based in the growth accounting framework suggest that electricity production helps explain cross-country differences in total factor productivity growth in the Middle East and North Africa region. Growth regressions support that conclusion, while also stressing an effect of telecommunications infrastructure. Finally, growth regressions also indicate quite consistently that the returns to infrastructure have been lower in the Middle East and North Africa region than in developing countries as a whole.Transport Economics Policy&Planning,Achieving Shared Growth,Economic Growth,E-Business,Energy Production and Transportation

Is the level of financial sector development a key determinant of private investment in the power sector ?

This paper seeks to assess the extent to which a country's overall level of development and that of its financial sector, in particular, are factors that attract private capital into infrastructure projects. The authors investigate these effects in a 1990-2007 dataset on the power sector in 37developing countries. The results suggest that economic growth is a key determinant of private investors'investment in infrastructure projects, and that investors tend to take countries’ governance quality into account in their decisions to invest. The empirical results highlight that the development of the financial sector also plays a significant role in private investors'decisions to enter infrastructure sectors. In particular, the degree of country risk and exchange rate volatility is found to be negatively related to the volume of private sector investment in power projects. Furthermore, when the banking sector and the capital market are separately treated in the analysis, the existence of a well functioning capital market is the main attracting factor. In addition, the existence of an independent energy regulatory authority significantly improves the level of private investors'implication in energy projects. When accounting for the interactions between the overall economic development and the financial sector development variables, the effects of these variables are still significant and the results also confirm the importance of an independent energy sector regulator.Emerging Markets,Debt Markets,Economic Theory&Research,Access to Finance,Private Participation in Infrastructure

Political accountability and regulatory performance in infrastructure industries : an empirical analysis

The aim of this paper is to empirically explore the relationship between the quality of political institutions and the performance of regulation, an issue that has recently occupied much of the policy debate on the effectiveness of infrastructure industry reforms. Taking the view that political accountability is a key factor that links political structures and regulatory processes, the authors investigate, for the case of telecommunications, its impact on the performance of regulation in two time-series-cross-sectional data sets on 29 developing countries and 23 industrial countries covering the period 1985-99. In addition to confirming some well documented results on the positive role of regulatory governance in infrastructure industries, the authors provide empirical evidence on the impact of the quality of political institutions and their modes of functioning on regulatory performance. The analysis of the data sets shows that the (positive) effect of political accountability on the performance of regulation is stronger in developing countries. An important policy implication of this finding is that future reforms in these countries should give due attention to the development of politically accountable systems.Infrastructure Regulation,Governance Indicators,National Governance,Statistical&Mathematical Sciences,Econometrics

Does political accountability matter for infrastructure regulation? The case of telecommunications

This paper discusses the link between political accountability, regarded as an important aspect of institutional design, and infrastructure regulation that has been emphasized in the recent literature on the role of institutions in economic development. We report on the findings and lessons drawn from an analysis of telecommunications data covering the period 1985-1999 on two sets of countries; one composed of 29 developing countries and another of 23 developed countries. The main point highlighted by the analysis is that infrastructure regulation in a given country cannot be independent of the institutional environment, in particular, the degree of political accountability that supports the country’s institutions. The argument is demonstrated by means of an econometric estimation of dynamic panel data models that shows evidence of a significant effect of pro- political accountability factors on regulatory performance as reflected in measures of sector output and efficiency. Expectedly enough, this effect is found to be more pronounced in the developing countries data set. A key policy implication of this result is that efforts to enhance institutional quality and support politically accountable systems in developing countries should yield large benefits for infrastructure regulation.Infrastructure regulation, regulatory performance, political accountability.

Empirical evidence on the impact of privatization of fixed-line operators on telecommunications performance - Comparing OECD, Latin American, and African countries

The aim of this paper is to highlight empirically some important worldwide differences in the impact of privatization of the fixed-line telecommunications operator on network expansion, tariffs, and efficiency during the 1985-2007 period for a large panel of countries. Our work suggests that the divergent results in the empirical literature on the performance of the privatization reform can be explained to a large extent by cross-regional heterogeneity. We find that the impact of privatization on outcomes is significantly positive in OECD and African resource scarce coastal countries, weakly positive in Latin American and the Caribbean countries, and strongly negative in African resource rich and African resource scarce landlocked countries. The results presented in this paper thus challenge the idea that there is a unique model of reform for infrastructure sectors that is equally applicable across regions and countries.Privatization, Telecommunications

Is the level of financial sector development a key determinant of private investment in the power sector?

TThis paper seeks to assess the extent to which a country’s overall level of development and that of its financial sector, in particular, are factors that attract private capital into infrastructure projects. The authors investigate these effects in a 1990–2007 dataset on the power sector in 37 developing countries. The results suggest that economic growth is a key determinant of private investors’ investment in infrastructure projects, and that investors tend to take countries’ governance quality into account in their decisions to invest. The empirical results highlight that the development of the financial sector also plays a significant role in private investors’ decisions to enter infrastructure sectors. In particular, the degree of country risk and exchange rate volatility is found to be negatively This paper—a product of the Sustainable Development Department, Middle East and North Africa Region—is part of a larger effort in the department to promote infrastructure development in client countries through applied research targeting cutting-edge policy, regulatory and infrastructure finance issues. Policy Research Working Papers are also posted on the Web at http://econ.worldbank.org. The author may be contacted at [email protected]. related to the volume of private sector investment in power projects. Furthermore, when the banking sector and the capital market are separately treated in the analysis, the existence of a well functioning capital market is the main attracting factor. In addition, the existence of an independent energy regulatory authority significantly improves the level of private investors’ implication in energy projects. When accounting for the interactions between the overall economic development and the financial sector development variables, the effects of these variables are still significant and the results also confirm the importance of an independent energy sector regulator