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The Privatization Origins of Political Corporations

Author

Listed:
  • Felipe González
  • Mounu Prem
  • Francisco Urzúa I

Abstract

We show how the sale of state owned firms in dictatorships may lead to the creation of political corporations operating in democracies. Using several novel datasets, we characterize the privatizations of the Pinochet regime in Chile using a data driven algorithm, confirming that some state owned firms were sold underpriced to politically connected individuals. We then show how firms with crooked privatization processes grew and benefited from Pinochet and in democracy formed political connections, financed political campaigns, and were more likely to appear in the Panama Papers. These results reveal how authoritarian regimes can influence a subsequent democracy and document a way in which political corporations are created.

Suggested Citation

  • Felipe González & Mounu Prem & Francisco Urzúa I, 2018. "The Privatization Origins of Political Corporations," Documentos de Trabajo 16357, Universidad del Rosario.
    • Handle: RePEc:col:000092:016357
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    Cited by:

    1. Gonzalez, Felipe & Prem, Mounu & von Dessauer, Cristine, 2023. "Empowerment or Indoctrination? Women Centers Under Dictatorship," SocArXiv 64mf9, Center for Open Science.
    2. Javier Cortes Orihuela & Juan D. Díaz & Pablo Gutiérrez Cubillos & Pablo A. Troncoso, 2023. "Intergenerational earnings persistence and the provision of public goods: evidence from chile’s constitutional process," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 21(1), pages 47-81, March.
    3. Aldunate, Felipe & González, Felipe & Prem, Mounu & Urzúa, Francisco, 2020. "Privatization and business groups: Evidence from the Chicago Boys in Chile," Explorations in Economic History, Elsevier, vol. 78(C).
    4. Bautista, María Angélica & Gonzalez, Felipe & Martinez, Luis R. & Muñoz, Pablo & Prem, Mounu, 2022. "The Intergenerational Transmission of College: Evidence from the 1973 Coup in Chile," SocArXiv eyw2a, Center for Open Science.
    5. Felipe González & Mounu Prem, 2020. "Losing your dictator: firms during political transition," Journal of Economic Growth, Springer, vol. 25(2), pages 227-257, June.
    6. Monica Martinez-Bravo & Leonard Wantchekon, 2021. "Political Economy and Structural Transformation: Democracy, Regulation and Public Investment," Working Papers wp2021_2110, CEMFI.
    7. Aldunate, Felipe & González, Felipe & Prem, Mounu, 2024. "The limits of hegemony: U.S. banks and Chilean firms in the Cold War," Journal of Development Economics, Elsevier, vol. 166(C).
    8. González, Felipe & Muñoz, Pablo & Prem, Mounu, 2021. "Lost in transition? The persistence of dictatorship mayors," Journal of Development Economics, Elsevier, vol. 151(C).
    9. Bautista, María Angélica & González, Felipe & Martínez, Luis R. & Muñoz, Pablo & Prem, Mounu, 2023. "The intergenerational transmission of higher education: Evidence from the 1973 coup in Chile," Explorations in Economic History, Elsevier, vol. 90(C).
    10. González, Felipe & Prem, Mounu, 2018. "The value of political capital: Dictatorship collaborators as business elites," Journal of Economic Behavior & Organization, Elsevier, vol. 155(C), pages 217-230.
    11. Aldunate, Felipe & Gonzalez, Felipe & Prem, Mounu, 2021. "Make the Economy Scream? U.S. Banks and Foreign Firms During the Cold War," SocArXiv bhwk7, Center for Open Science.
    12. Gonzalez, F & Prem, M, 2021. "The Legacy of the Pinochet Regime," Documentos de Trabajo 19446, Universidad del Rosario.
    13. Gonzalez, Felipe & Coy, Felipe & Prem, Mounu & von Dessauer, Cristine, 2022. "Uncertainty from dictatorship to democracy: Evidence from business communications," SocArXiv gz934, Center for Open Science.

    More about this item

    Keywords

    Corporation; privatization; rent seeking; dictatorship; democracy;
    All these keywords.

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