The Political Economy of Privatization
57 Pages Posted: 21 Jul 2003
Date Written: June 2003
This paper provides an empirical analysis of the role of political institutions in privatization. Using panel data for 21 industrialized countries in the 1977-1999 period, first we show that the timing and extent of privatization is affected by political fragmentation and proportional elections. As theory predicts, in consensual democracies large-scale privatization appears to be delayed by a war of attrition among different veto players. Second, privatization seems strongly affected by partisan politics. Particularly, right-wing executives with re-election concerns design privatization to spread share ownership among domestic voters.
Keywords: Keywords: Political Institutions, Partisan Politics, Privatization
JEL Classification: D72, D78, L33
Suggested Citation: Suggested Citation