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The aim of this paper is to shed new light on key challenges in governance arrangements for state owned enterprises in infrastructure sectors. The paper provides guidelines on how to classify the fuzzy and sometimes conflicting development goals of infrastructure and the governance arrangements needed to reach such goals. Three policy recommendations emerge. First, some of the structures implied by internationally adopted principles of corporate governance for state owned enterprises favoring a centralized ownership function versus a decentralized or dual structure have not yet been sufficiently "tested" in practice and may not suit all developing countries. Second, general corporate governance guidelines (and policy recommendations) need to be carefully adapted to infrastructure sectors, particularly in the natural monopoly segments. Because the market structure and regulatory arrangements in which state owned enterprises operate matters, governments may want to distinguish the state owned enterprises operating in potentially competitive sectors from the ones under a natural monopoly structure. Competition provides not only formidable benefits, but also unique opportunities for benchmarking, increasing transparency and accountability. Third, governments may want to avoid partial fixes, by tackling both the internal and external governance factors. Focusing only on one of the governance dimensions is unlikely to improve SOE performance in a sustainable way.

Accountability --- Banks and Banking Reform --- Corporate governance --- Debt Markets --- Disclosure --- Finance and Financial Sector Development --- Financial institutions --- Governance --- National Governance --- Private ownership --- Private sector participation --- Public Private Partnerships --- Public sector --- Public Sector Economics and Finance --- Public Sector Expenditure Analysis and Management --- State ownership --- Transparency

Choose an application

• Reference Manager
• EndNote
• RefWorks (Direct export to RefWorks)

The aim of this paper is to shed new light on key challenges in governance arrangements for state owned enterprises in infrastructure sectors. The paper provides guidelines on how to classify the fuzzy and sometimes conflicting development goals of infrastructure and the governance arrangements needed to reach such goals. Three policy recommendations emerge. First, some of the structures implied by internationally adopted principles of corporate governance for state owned enterprises favoring a centralized ownership function versus a decentralized or dual structure have not yet been sufficiently "tested" in practice and may not suit all developing countries. Second, general corporate governance guidelines (and policy recommendations) need to be carefully adapted to infrastructure sectors, particularly in the natural monopoly segments. Because the market structure and regulatory arrangements in which state owned enterprises operate matters, governments may want to distinguish the state owned enterprises operating in potentially competitive sectors from the ones under a natural monopoly structure. Competition provides not only formidable benefits, but also unique opportunities for benchmarking, increasing transparency and accountability. Third, governments may want to avoid partial fixes, by tackling both the internal and external governance factors. Focusing only on one of the governance dimensions is unlikely to improve SOE performance in a sustainable way.

Accountability --- Banks and Banking Reform --- Corporate governance --- Debt Markets --- Disclosure --- Finance and Financial Sector Development --- Financial institutions --- Governance --- National Governance --- Private ownership --- Private sector participation --- Public Private Partnerships --- Public sector --- Public Sector Economics and Finance --- Public Sector Expenditure Analysis and Management --- State ownership --- Transparency

Choose an application

• Reference Manager
• EndNote
• RefWorks (Direct export to RefWorks)

Infrastructure has particular challenges in public procurement, because it is highly complex and customized and often requires economic, political and social considerations from a long time horizon. To deliver public infrastructure services to citizens or taxpayers, there are a series of decisions that governments have to make. The paper provides a minimum package of important economic theories that could guide governments to wise decision-making at each stage. Theory suggests that in general it would be a good option to contract out infrastructure to the private sector under high-powered incentive mechanisms, such as fixed-price contracts. However, this holds under certain conditions. Theory also shows that ownership should be aligned with the ultimate responsibility for or objective of infrastructure provision. Public and private ownership have different advantages and can deal with different problems. It is also shown that it would be a better option to integrate more than one public task (for example, investment and operation) into the same ownership, whether public or private, if they exhibit positive externalities.

Banks and Banking Reform --- Contract Law --- Debt Markets --- Electricity --- Finance and Financial Sector Development --- Government Procurement --- Infrastructure Economics --- Infrastructure Economics and Finance --- Investment and Investment Climate --- Labor Policies --- Law and Development --- Macroeconomics and Economic Growth --- Positive externalities --- Private partnerships --- Private sector --- Private sector participation --- Property rights --- Provision of infrastructure --- Provisions --- Public --- Public contracts --- Public economics --- Public goods --- Public infrastructure --- Public ownership --- Public private partnerships --- Public procurement --- Public Sector Corruption and Anticorruption Measures --- Public Sector Economics and Finance --- Public works --- Savings --- Social Protections and Labor --- Social welfare --- Transport --- Transport Economics, Policy and Planning --- Utilities

Choose an application

• Reference Manager
• EndNote
• RefWorks (Direct export to RefWorks)

Infrastructure has particular challenges in public procurement, because it is highly complex and customized and often requires economic, political and social considerations from a long time horizon. To deliver public infrastructure services to citizens or taxpayers, there are a series of decisions that governments have to make. The paper provides a minimum package of important economic theories that could guide governments to wise decision-making at each stage. Theory suggests that in general it would be a good option to contract out infrastructure to the private sector under high-powered incentive mechanisms, such as fixed-price contracts. However, this holds under certain conditions. Theory also shows that ownership should be aligned with the ultimate responsibility for or objective of infrastructure provision. Public and private ownership have different advantages and can deal with different problems. It is also shown that it would be a better option to integrate more than one public task (for example, investment and operation) into the same ownership, whether public or private, if they exhibit positive externalities.

Banks and Banking Reform --- Contract Law --- Debt Markets --- Electricity --- Finance and Financial Sector Development --- Government Procurement --- Infrastructure Economics --- Infrastructure Economics and Finance --- Investment and Investment Climate --- Labor Policies --- Law and Development --- Macroeconomics and Economic Growth --- Positive externalities --- Private partnerships --- Private sector --- Private sector participation --- Property rights --- Provision of infrastructure --- Provisions --- Public --- Public contracts --- Public economics --- Public goods --- Public infrastructure --- Public ownership --- Public private partnerships --- Public procurement --- Public Sector Corruption and Anticorruption Measures --- Public Sector Economics and Finance --- Public works --- Savings --- Social Protections and Labor --- Social welfare --- Transport --- Transport Economics, Policy and Planning --- Utilities