State Owned Enterprises and Redistribution: An Empirical Analysis
AbstractIn the past decade many developing economies started to privatize their state owned enterprises. Recently, however, this process seems to have slowed down in some economies and have completely been stalled in others. Here we formalize the view that this is so because these enterprises are major instruments of income redistribution and, in economies with significant degrees of income inequality, segments of the population that benefit from this redistribution would use whatever political power they may have to oppose its abandonment. We find strong and robust empirical support for this hypothesis using cross-country data on the relative size of the state-owned-enterprise sector and different measures of inequality. We also find support for the propositions that dictatorships as well as democracies use this redistributive tool and that left-wing governments tend to redistribute more than right-wing governments through state owned enterprises.
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Bibliographic InfoPaper provided by Florida International University, Department of Economics in its series Working Papers with number 0511.
Length: 32 pages
Date of creation: Jul 2005
Date of revision:
state-owned enterprises; inequality; redistribution; political economy;
Find related papers by JEL classification:
- H0 - Public Economics - - General
- O1 - Economic Development, Technological Change, and Growth - - Economic Development
This paper has been announced in the following NEP Reports:
- NEP-ALL-2005-08-08 (All new papers)
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