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Why are Developing Countries Privatizing?

Author

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  • Ravi Ramamurti

    (Northeastern University)

Abstract

This article tests alternative hypotheses about why developing countries are pursuing privatization, a policy that gained considerable popularity in the 1980s. Univariate and multivariate analysis indicate that privatization was more likely to be pursued by countries with high budget deficits, high foreign debt, and high dependence on international agencies like the World Bank and the IMF. In regions such as Latin America and Asia, the trend was also more likely in countries. (a) that seemed to have “overused” state enterprises in the past, and (b) those in which the private sector had grown faster than average and was thus more ready to assume tasks once assigned to state enterprises. In Africa, however, the policy may have been imposed by external agencies on countries that were not necessarily ripe for privatization. For multinational firms, the international opportunities created by privatization are likely to be greater in the 1990s than in the 1980s.© 1992 JIBS. Journal of International Business Studies (1992) 23, 225–249

Suggested Citation

  • Ravi Ramamurti, 1992. "Why are Developing Countries Privatizing?," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 23(2), pages 225-249, June.
  • Handle: RePEc:pal:jintbs:v:23:y:1992:i:2:p:225-249
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    Citations

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    Cited by:

    1. Bruno Viani, 2011. "Can Governments signal commitment in privatization sales?," Hacienda Pública Española / Review of Public Economics, IEF, vol. 197(2), pages 87-110, June.
    2. repec:dgr:rugsom:01a21 is not listed on IDEAS
    3. Hailemariam, Stifanos & Eije, Henk von & Werf, Jos van der, 2002. "Is there a ´privatization trap´? : the case of the manufacturing industries in Eritrea," Research Report 02A04, University of Groningen, Research Institute SOM (Systems, Organisations and Management).
    4. Simrit Kaur, 2004. "Privatization And Public Enterprise Reform: A Suggestive Action Plan," ASARC Working Papers 2004-08, The Australian National University, Australia South Asia Research Centre.
    5. Vaaler, Paul M. & Schrage, Burkhard N., 2007. "Residual State Factors, Policy Stability and Financial Performance Following Strategic Decisions by Privatizing Telecoms," Working Papers 07-0102, University of Illinois at Urbana-Champaign, College of Business.
    6. Simrit Kaur, 2002. "The Employment Implication of Divestiture: The Indian Experience," Vision, , vol. 6(1), pages 59-72, January.
    7. Mike W. Peng & Garry D. Bruton & Ciprian V. Stan & Yuanyuan Huang, 2016. "Theories of the (state-owned) firm," Asia Pacific Journal of Management, Springer, vol. 33(2), pages 293-317, June.
    8. Ruiyuan Chen & Sadok El Ghoul & Omrane Guedhami & Chuck C. Y. Kwok & Robert Nash, 2021. "International evidence on state ownership and trade credit: Opportunities and motivations," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 52(6), pages 1121-1158, August.
    9. Yi Karnes, 2015. "Investing Under Institutional Uncertainty: The Choice And Consequence Of Governance Structures," Proceedings of International Academic Conferences 2804651, International Institute of Social and Economic Sciences.
    10. Lazzarini,Sergio G., 2022. "The Right Privatization," Cambridge Books, Cambridge University Press, number 9781316519714, October.
    11. Abdul Aleem Qureshi & Syed Faizan Iftikhar & Mohsin Hasnain Ahmed, 2017. "The Fiscal Impacts of Privatization Reforms in Pakistan: A Dynamic Analysis," Econometrics Letters, Bilimsel Mektuplar Organizasyonu (Scientific letters), vol. 4(1), pages 17-32.
    12. Qazi Masood Ahmed & Mohammad Sabihuddin Butt & Shaista Alam, 2000. "Economic Growth, Export, and External Debt Causality: The Case of Asian Countries," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 39(4), pages 591-608.
    13. Ramamurti, Ravi, 2000. "Risks and rewards in the globalization of telecommunications in emerging economies," Journal of World Business, Elsevier, vol. 35(2), pages 149-170, July.
    14. Jiang, Yi & Peng, Mike W. & Yang, Xiaohua & Mutlu, Canan C., 2015. "Privatization, governance, and survival: MNE investments in private participation projects in emerging economies," Journal of World Business, Elsevier, vol. 50(2), pages 294-301.
    15. Victor O. Ojo & M. Sohail, 2023. "Assessing the Performance of State Water Utilities in Nigeria: Towards Achieving the Sustainable Development Goal on Drinking Water," Sustainability, MDPI, vol. 16(1), pages 1-23, December.
    16. Omrane Guedhami & Jeffrey A. Pittman, 2006. "Ownership Concentration in Privatized Firms: The Role of Disclosure Standards, Auditor Choice, and Auditing Infrastructure," Journal of Accounting Research, Wiley Blackwell, vol. 44(5), pages 889-929, December.
    17. Hailemariam, Stifanos & Eije, Henk van, 2001. "The impact of slow privatisation in the beverage and textile industry in Eritrea," Research Report 01A21, University of Groningen, Research Institute SOM (Systems, Organisations and Management).
    18. Narjess Boubakri & Jean-Claude Cosset & Nassima Debab & Pascale Valéry, 2011. "Privatization and Globalization: an Empirical Analysis," Cahiers de recherche 1130, CIRPEE.
    19. Mertzanis, Charilaos & Garas, Samy & Abdel-Maksoud, Ahmed, 2020. "Integrity of financial information and firms' access to energy in developing countries," Energy Economics, Elsevier, vol. 92(C).
    20. Luis Perez-Batres & Van Miller & Michael Pisani, 2010. "CSR, Sustainability and the Meaning of Global Reporting for Latin American Corporations," Journal of Business Ethics, Springer, vol. 91(2), pages 193-209, February.
    21. Gamso, Jonas & Nelson, Roy C., 2019. "Does partnering with the World Bank shield investors from political risks in less developed countries?," Journal of World Business, Elsevier, vol. 54(5), pages 1-1.
    22. Álvarez, María José & González de la Fe, Pedro, 1998. "Las cuentas de las privatizaciones: el caso de Seat," DEE - Documentos de Trabajo. Economía de la Empresa. DB 6398, Universidad Carlos III de Madrid. Departamento de Economía de la Empresa.
    23. Kate Bayliss & Ben Fine, 1998. "Beyond Bureaucrats in Business: a critical review of the World Bank approach to privatization and public sector reform," Journal of International Development, John Wiley & Sons, Ltd., vol. 10(7), pages 841-855.
    24. repec:dgr:rugsom:02a04 is not listed on IDEAS

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