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Privatization Discontent and Its Determinants: Evidence from Latin America

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Author Info

  • Checchi, Daniele

    ()
    (University of Milan)

  • Florio, Massimo

    ()
    (University of Milan)

  • Carrera, Jorge

    ()
    (University of La Plata)

Abstract

Privatization policy faces increasing popular opposition in Latin America. We test for the determinants of this discontent. We use the results of Latinobarometro (2002), a survey of a representative sample of 18522 individuals in 17 countries as our dependent variable of perception, and a privatization dataset on the same countries, including sectoral disaggregation of divestitures, time profiles, proceeds, and other variables for each country. We use as well a set of macroeconomic variables as controls.. Our main finding is that disagreement with privatization is more likely when the respondent is poor, privatization was large and quick, involved a high proportion of public services as water and electricity, the country suffered adverse macroeconomic shocks, and there is high inequality of incomes. The more the respondent is educated, the more adverse to privatization he or she is. We suggest that these results depict a broadly consistent picture of privatization discontent that points to distributional issues, probably because of tariff rebalancing not adequately addressed by policy makers and regulators, as suggested by earlier empirical papers. Further research is needed on the relationship between perceptions and actual welfare changes.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 1587.

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Length: 46 pages
Date of creation: May 2005
Date of revision:
Publication status: published in: Journal of Development Studies, 2009, 45(3), 333-350
Handle: RePEc:iza:izadps:dp1587

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Keywords: social attitudes; panel survey data; distributive impact; Latin America; privatization;

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References

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  1. Trujillo, Lourdes & Martin, Noelia & Estache, Antonio & Campos, Javier, 2002. "Macroeconomics effects of private sector participation in Latin America's infrastructure," Policy Research Working Paper Series 2906, The World Bank.
  2. Eduardo Lora, 2001. "Structural Reforms in Latin America: What Has Been Reformed and How to Measure It," Research Department Publications, Inter-American Development Bank, Research Department 4293, Inter-American Development Bank, Research Department.
  3. Chisari, Omar & Estache, Antonio & Romero, Carlos, 1999. "Winners and Losers from Utility Privatization in Argentina. Lessons from a General Equilibrium Model," UADE Working Papers, Instituto de Economía, Universidad Argentina de la Empresa 3_1999, Instituto de Economía, Universidad Argentina de la Empresa.
  4. Máximo Torero, 2003. "Peruvian Privatization: Impacts On Firm Performance," Research Department Publications, Inter-American Development Bank, Research Department 3173, Inter-American Development Bank, Research Department.
  5. Estache, Antonio & Gomez-Lobo, Andres & Leipziger, Danny, 2000. "Utility privatization and the needs of the poor in Latin America - Have we learned enough to get it right?," Policy Research Working Paper Series 2407, The World Bank.
  6. Federico Sturzenegger & Ernesto Schargrodsky & Sebastian Galiani & Paul Gertler, 2003. "The Costs and Benefits of Privatization in Argentina: A Microeconomic Analysis," Research Department Publications, Inter-American Development Bank, Research Department 3148, Inter-American Development Bank, Research Department.
  7. Massimo Florio, 2006. "The Great Divestiture: Evaluating the Welfare Impact of the British Privatizations, 1979-1997," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262562227, December.
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  22. Massimo Florio & Rinaldo Brau, 2001. "Privatisations as price reforms: an analysis of consumers' welfare change in the U.K," Departmental Working Papers, Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano 2001-19, Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano.
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Citations

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Cited by:
  1. Mariano Tommasi & Alvaro Forteza & German Herrera, 2005. "Understanding Reform in Latin America," Working Papers 88, Universidad de San Andres, Departamento de Economia, revised Dec 2005.
  2. Bonnet, Céline & Dubois, Pierre & Martimort, David & Straub, Stéphane, 2009. "Empirical Evidence on Satisfaction with Privatization in Latin America: Welfare Effects and Beliefs," TSE Working Papers, Toulouse School of Economics (TSE) 09-020, Toulouse School of Economics (TSE).
  3. Gelsomina Catalano & Davide Sartori, 2013. "Infrastructure investment long term contribution: Economic development and wellbeing," Working Papers, Centre for Industrial Studies (CSIL) 201301, Centre for Industrial Studies (CSIL).
  4. Antonio Estache & L. Wren-Lewis, 2008. "Towards a Theory of Regulation for Developing Countries: Following Laffont's Lead," Working Papers ECARES, ULB -- Universite Libre de Bruxelles 2008_018, ULB -- Universite Libre de Bruxelles.
  5. Martimort, David & Straub, Stéphane, 2009. "Infrastructure privatization and changes in corruption patterns: The roots of public discontent," Journal of Development Economics, Elsevier, Elsevier, vol. 90(1), pages 69-84, September.

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