Privatization of telecommunications in Latin America, an analysis of its efficiency

This paper evaluates the efficiency of the telecommunications sector in Latin America. The great dynamism acquired by this sector has been due to external factors of change such as privatization processes that took place mainly during the nineties, technological changes, market liberalization and internationalization of services and funds lender firms. In this regards, the purpose of this paper is to assess the evolution of telecommunications by valuing the two main responsible factors: privatization and technological advances. In order to understand privatizations in economic policies carried out in Latin as well as to assess its efficiency and to what extent it accounted as a dynamic component in the telecommunications case, this work accounts privatizations as a changing element of economic policies in Latin America. A close look at the motivations and characteristics behind privatizations in the telecommunications sector in Latin America is shown. Finally, a measure on the results of the privatizations in terms of efficiency is obtained. To measure the efficiency of the telecommunications sector at regional, country and company levels, methodology of Data Envelopment Analysis (DEA) is used, complemented with Total Factor Productivity (TFP) and Index of Malmquist. The results indicate that the process of privatization and technological advances have been two distinguish elements for the development of telecommunications, improving the service provided to society, as well as their efficiency and productivity rates.