importance of external governance for the management of SOEs such as the role of the government agency in charge of ownership decisions and the relevance of regulation.

Schwartz (2006) sheds light onto the discussions about the organizational model in state water utilities. He distinguishes two main organizational approaches, the Bureaucratic Model and the New Public Management Mode’, and applies them to public water utilities in Mexico. He defines the Bureaucratic Model as one based on the preeminence of the law and rules, composed of civil servants with stability and civil service careers in public administration, and organized under the principles of hierarchy and levels. The New Public Management framework proposes higher levels of decentralization of and autonomy to government entities, the use of performance-based instruments such as performance-based payments, and accountability focused on results. The author challenges conventional wisdom about the effectiveness of New Public Management institutions to state enterprises, finding that well performing public utilities tend to display a stronger adherence to the Weberian ideal-type than poorly functioning public service providers. He concludes by asserting that rather than opposite strategies, they are better viewed as complementary. Whereas the Bureaucratic model focuses on reducing patronage and depoliticizing the management of the utility, the New Public Management model emphasizes the levels of service that must be delivered by the utility (New Public Management model).

Whether we consider corporate governance as a means to privatization or as an end in itself, both approaches lack empirical evidence about the impact of governance on performance. For instance, there is no assessment about the contributions of corporatization to access to finance or productivity, or the role of shares in non-profit oriented enterprises. Moreover, the emergence of regulation, as the institutional response to the efficiency of utilities, has not been discussed and analyzed in the context of state providers. This paper attempts to fill some of those gaps.

# **3. METHODOLOGY/FRAMEWORK OF THE ANALYSIS**

We study the governance of SOEs in infrastructure through seven measures. Selected measures attempt to describe the main variables of the governance dynamics that characterize a state corporation. For that purpose, we created an aggregate measure of corporate governance and six salient aspects referred to specific corporate governance themes. The five themes address the following CG aspects: the legal framework of the corporation, the composition and quality of the Board and CEO, the quality of the company’s bureaucracy, the performance orientation of the enterprise, and the mechanisms to guarantee the transparency of the financial and non-financial information.

Information was collected through surveys sent to 110 different utilities of the region in both the electricity and water sectors. Final respondents were 44 state-owned enterprises of the Latin American and the Caribbean region. We included both public companies with full state ownership and companies where despite there is private investment state ownership is at least 51 percent of total shares (only a few in this category). Our aggregate measure includes a sixth variable related to the listing of the company in the stock exchange.

The methodology proposed to benchmark SOEs of the LAC region is based on various criteria. For this last purpose, the paper compares government enterprises based on different tiers or thresholds. Utilities were grouped based on their corporate governance status in different indicators. Utilities within Tier 1 (T1) are those SOEs that have “desirable” conditions for corporate governance (their responses scored highest in the survey’s questions). Utilities within 4