Ideology and Privatization: Casting a Partisan Light on Regulatory Choices

Abstract

Economic policymaking in Latin America at the end of the twentieth century seemed to confirm the expectations of the literature on globalization, which emphasizes how increasing capital mobility reduced the influence of domestic politics on economic policy outcomes. This effect was exacerbated by the 1980s Debt Crisis, which pushed regional governments of different partisan orientations - including both right-wing market liberals and former populists who had promoted nationalization - to pursue market-oriented policies in the 1980s and 1990s. However, even when financial constraints pushed politicians toward policy convergence, partisanship continued to shape policy making. Using electricity privatization as an example, we show that the regulatory content of privatization varied according to the identity of privatizers. The regulatory choices made at the time of privatization were largely driven by the ideological legacies of the privatizing administrations, the distributive effects on their constituencies, and the identity of the experts they relied on for technical advice.

Keywords: regulation, Latin America, partisanship, ideology