Who Wants to Revise Privatization and Why? Evidence from 28 Post-Communist Countries

Abstract:     
A 2006 survey of 28,000 individuals in 28 post-communist countries reveals overwhelming support for revising privatization, but also that most respondents prefer to leave firms in private hands. We test three theories of support for reform by examining who wants to revise privatization and why. First, consistent with a "utilitarian" view, respondents with poor human capital and few assets support revising privatization in all institutional settings and hold this view because of a material preference for state over private property. Second, contrary to Przeworski's "political inclusiveness" view, economic hardships during transition increase support for state property in democracies to a larger extent than in autocracies and increase support for revising privatization due to a concern for the legitimacy of reforms in all institutional settings. Third, consistent with a "property rights" view, new small-scale entrepreneurs oppose revising privatization and support private property only in good institutional environments as they fear expropriation when institutions are weak.

Keywords: privatization, revision, nationalization, property rights, demand for property rights, legitimacy of property rights, transition

JEL Classifications: P20, P26, P46, P50, L33

Working Paper Series