Privatization and Business Groups: Evidence from the Chicago Boys in Chile

53 Pages Posted: 29 Jul 2019 Last revised: 7 Apr 2020

See all articles by Felipe Aldunate

Felipe Aldunate

Pontifical Catholic University of Chile

Felipe González

Pontifical Catholic University of Chile - Institute of Economics

Mounu Prem

Universidad del Rosario

Francisco Urzúa I.

City University London - Sir John Cass Business School

Date Written: April 6, 2020

Abstract

Business groups are the predominant organizational structure in modern Chile. This article tests the long-standing hypothesis that the privatization reform implemented by the “Chicago Boys” during the Pinochet regime facilitated the creation of new groups and hence the renovation of the country’s elites. Using new data we find that firms sold during this privatization later became part of new business groups, process aided by an economic crisis that debilitated traditional elites. Moreover, some firms were bought by Pinochet’s allies and were later used as providers of capital within groups. We conclude that privatizations can empower outsiders to replace business elites.

Keywords: government, firms, groups, privatization

JEL Classification: G32, L33

Suggested Citation

Aldunate, Felipe and González, Felipe and Prem, Mounu and Urzua, Francisco, Privatization and Business Groups: Evidence from the Chicago Boys in Chile (April 6, 2020). Available at SSRN: https://ssrn.com/abstract=3426755 or http://dx.doi.org/10.2139/ssrn.3426755

Felipe Aldunate

Pontifical Catholic University of Chile ( email )

Vicuna Mackenna 4860
Santiago, 99999
Chile

Felipe González

Pontifical Catholic University of Chile - Institute of Economics ( email )

Casilla 76
Correo 17
Santiago
Chile

Mounu Prem (Contact Author)

Universidad del Rosario ( email )

Casa Pedro Fermín
Calle 14 # 4-69
Bogota
Colombia

Francisco Urzua

City University London - Sir John Cass Business School ( email )

106 Bunhill Row
London, EC1Y 8TZ
United Kingdom

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