Privatization and Nationalization Cycles

59 Pages Posted: 20 Apr 2016

See all articles by Roberto Chang

Roberto Chang

Rutgers University, New Brunswick/Piscataway - Faculty of Arts and Sciences-New Brunswick/Piscataway - Department of Economics; National Bureau of Economic Research (NBER)

Constantino Hevia

Universidad Torcuato Di Tella - Departamento de Economia

Norman Loayza

World Bank - Research Department

Multiple version iconThere are 2 versions of this paper

Date Written: August 1, 2009

Abstract

This paper studies the cycles of nationalization and privatization in resource-rich economies as a prime instance of unstable institutional reform. The authors discuss the available evidence on the drivers and consequences of privatization and nationalization, review the existing literature, and present illustrative case studies. This leads to the main contribution of the paper: a static and dynamic model of the choice between private and national regimes for the ownership of natural resources. In the model, the basic tradeoff is given by equality (national ownership) versus efficiency (private ownership). The connection between resource ownership and the equality-efficiency tradeoff is given by the incentives for effort that each regime elicits from workers. The resolution of the tradeoff depends on external and domestic conditions that affect the value of social welfare under each regime. This leads to a discussion of how external conditions—such as the commodity price—and domestic conditions—such as the tax system-- affect the choice of private vs. national regimes. In particular, the analysis identifies the determinants of the observed cycles of privatization and nationalization.

Keywords: Economic Theory & Research, Political Economy, Emerging Markets, Labor Policies, Markets and Market Access

Suggested Citation

Chang, Roberto and Hevia, Constantino and Loayza, Norman, Privatization and Nationalization Cycles (August 1, 2009). World Bank Policy Research Working Paper Series, Vol. , pp. -, 2009. Available at SSRN: https://ssrn.com/abstract=1471127

Roberto Chang (Contact Author)

Rutgers University, New Brunswick/Piscataway - Faculty of Arts and Sciences-New Brunswick/Piscataway - Department of Economics ( email )

75 Hamilton Street
New Brunswick, NJ 08901
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Constantino Hevia

Universidad Torcuato Di Tella - Departamento de Economia ( email )

Minones 2177
1428 Buenos Aires
Argentina

Norman Loayza

World Bank - Research Department ( email )

1818 H Street, N.W.
Washington, DC 20433
United States

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