Critics often argue that the benefits of privatization come at a significant cost to society.
We found dramatic improvement in the performance of the newly privatized firms, with operating profits rising as much as 24 percentage points. In 1982, more than 1,200 state enterprises in almost every sector of the Mexican economy received subsidies and other transfers equaling almost 13 percent of the Gross Domestic Product. These state enterprises, however, produced only 14 percent of the national output, employed around four percent of Mexico's labor force, and accounted for 38 percent of fixed capital investment. The government began to unravel the state sector in 1983. By June1992, the number of firms under state control had been reduced to less than 220 firms.