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Privatization of large national enterprises has been the most far-reaching of Latin America's dramatic structural reforms, the objective being to underpin fiscal stability by shedding huge capital requirements. But long-term gains to the economy also depend on such factors as increased efficiency through better communications and infrastructure and

The experiences of Latin American countries, of Mexico and Chile in particular, demonstrate how important it may be to reform macroeconomic policies and open the economy to external competition before tackling the privatization of the public sector. The obstructive force of rent-seeking behavior is shown most clearly in the Argentine case, while the Brazilian experience is useful to remind that rent-seeking dynamics are not necessarily incompatible with structural transformation and growth

Pending an unlikely resumption of the growth rates of the 1970s, the stresses and strains of economic readjustment are bound to be consequential for some time to come. The operations of the public sector have a constructive role to play in absorbing some of these tensions. Mounting unrest must, therefore, be met by heavy expenditures as in Chile, on conflict containment

In the literature of development, it is recognized that the possibilities for national economic growth are strongly conditioned by prevailing institutional patterns. Exogenous factors, such as international market trends, the supply of foreign investment funds, and terms of trade, define outer constraints on the growth of many less developed countries; but within these boundaries, the realizable growth depends on endogenously set parameters that influence public policy alternatives, the level and direction of domestic capital formation, and the scope and rapidity of structural economic changes. It is in this latter area that the study of institutional performance becomes relevant.To date, the focus of institutional analysis has been on a variety of social organizations that influence the economic process at one point or another, e.g., trade unions, political parties, financial intermediaries, land tenure systems, and government agencies.