ANDERSON, Joan B <br/><br/>
Privatization, efficiency and market failure :  transforming Ecuador's public sector 

 - New York :  Marcel Dekker,  2000 
<br/><br/> Much of the privatization that is occurring in Latin America is leading to improved efficiency. However, Privatization in areas where market do not yeld efficient solutions, for example of public good, like light houses, natural monopolies, mainly utilities, and good with externalities, like education, can lead to lower output and higher costs in the long run. This paper first presents an outline of the shift in development theory with respect to the role of the public sector. In then examines the growth of Ecuador's public sector and its current debate on how privatization should proceed. It concludes that while careful privatization can be positive, privatizing natural monopolies like the electric utility and/or quasi-public goods, like highways are likely to be detrimental to long run economic development. In order for Ecuador's economy to continue to develop, the public sector still needs to play a significant role in developing human capital and physical infrastructure