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The Chilean Infrastructure Concessions Program: Evaluation, Lessons and Prospects for the Future

Keywords: Infrastructure, Regulation, Franchises, Chile.

This paper describes and evaluates the Chilean infrastructure concessions program, which is one of the main economic innovations carried out by the center-left coalition of political parties that has governed Chile since the return to democracy in 1990. The main principles underlying the economics of franchising are discussed and used to evaluate the program, thereby reviewing the privatizations of highways and seaports in detail. Compared with experiences in other countries, the results are promising. The infrastructure deficit has been greatly reduced, innovative ideas have been used successfully and several pitfalls have been avoided. However, since franchise terms are long, the final verdict will not be in for at least a decade. We offer various suggestions to increase the likelihood of a positive outcome. We believe implementing these suggestions would lead to important savings for taxpayers and users.