A consideration of 'Asset Recycling' as a means of improving infrastructure levels

By Tony Chen

Tony attended the 2016 World Bank and IMF Annual Meetings in Washington D.C. Tony is studying a Bachelor of Commerce at the University of Melbourne Faculty of Business and Economics.

Abstract

This policy paper explores the topic of Asset Recycling. Asset Recycling (which will be referred to via the abbreviation AR from here forth) is a process of funding and creating new infrastructure developments through the privatisation of current nationally held physical assets and utilities.

There are three broad parts to this paper. The first considers the economic costs and benefits surrounding privatisation and brings them together in a decision rule. The second section examines how the government can optimise the balance between these costs and benefits in order to attain the most favourable outcome for society. Finally, the paper analyses how privatisation and Asset Recycling should be considered in the context of global and domestic economic stability. This will be accomplished through a case study of the Brazilian electricity industry during the 1990s under the government of Fernando Cardoso.

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