The relationship between the quality of political institutions and the performance of regulation has recently assumed greater prominence in the policy debate on the effectiveness of infrastructure industry reforms. Taking the view that political accountability is a key factor linking political and regulatory structures and processes, this article empirically investigates its impact on the performance of regulation in telecommunications in time-series-cross-sectional data sets for 29 developing countries and 23 developed countries during 1985-99. In addition to confirming some well-documented results on the positive role of regulatory governance in infrastructure industries, the article provides empirical evidence on the impact of the quality of political institutions and their modes of functioning on regulatory performance. The analysis finds that the impact of political accountability on the performance of regulation is stronger in developing countries. An important policy implication is that future reforms in these countries should give due attention to the development of politically accountable systems.

The Policy Research Working Paper Series disseminates the findings of work in progress to encourage the exchange of ideas about development issues. An objective of the series is to get the findings out quickly, even if the presentations are less than fully polished. The papers carry the names of the authors and should be cited accordingly. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the views of the International Bank for Reconstruction and Development/World Bank and its affiliated organizations, or those of the Executive Directors of the World Bank or the governments they represent.

In the aftermath of the 1997 East-Asian financial crisis, the government of the Republic of Korea published a Private Participation in Infrastructure (PPI) Act in order to remove the main impediments to private investment in infrastructure sectors. The implementation of the Act was followed by a steady increase in the number of PPI projects, thus spurring the modernization of the main infrastructure facilities in transport, water, electricity and telecommunications. Despite this progress, the Korean PPI market still faces critical challenges that are probably related to its nascent stage of development. The market is dominated by five construction and engineering firms, but lacks world-class project developers. At the same time, the procurement of PPI projects takes on average four years, and competition in tenders is limited. The number of unsolicited proposals is abnormally high, whereas the number of solicited proposals remains flat. The participation of foreign firms is very limited despite the size of the market and the number of projects awarded. Although local financing is available, the maturity of financing instruments does not exceed five years for most corporate papers, and ten years for government bonds. This paper reviews the procurement of PPI projects in Korea and benchmarks it to international best practices before proposing options for its improvement.

By the end of the 1990s, most developed and many developing countries had liberalized their telecommunications markets to improve service accessibility and affordability to both businesses and households. In contrast, Algeria still managed its telecommunications sector as public property. The Ministry of Post and Telecommunications set the policy, enforced regulation and was in charge of service provision. The sector suffered from huge supply shortages, the waiting list lengthened, the quality of service deteriorated and overall the fiscal situation was unbalanced. In 1999, a new government appointed in the aftermath of President Bouteflika's election decided to change the situation and launched a comprehensive sector reform. This note reviews progress made in implementing this reform, discusses its preliminary impact, and comments on the main lessons learned. The note shows that by restraining arbitrary administrative action during the reform implementation, the government of Algeria laid the foundation for sustainable growth in the telecommunications sector.

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