While most economists usually believe that privatization policy is socially beneficial, it faces increasing opposition in several countries. In this paper we wish to discover the ingredients in a recipe for privatization discontent. To do so we focus on Latin America, where there is wide evidence of popular opposition to privatization. We use the results of Latinobarometro (2002), a survey of a representative sample of 18501 individuals in 17 countries as our dependent variable of perception, and a privatization dataset on the same countries, including sectoral disaggregation, time profiles, proceeds, number of shares and other variables for each country. We use a set of macrovariables as controls, and test our prior beliefs on the determinants of policy failure in this area. 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, and the country suffered adverse macroeconomic shocks in a condition of high disequality of incomes. Moreover, 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 a combination of perceived distributional concerns that should be addressed by future research and policy design
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Paper provided by Department of Economics University of Milan Italy in its series Departemental Working Papers with number
2004-23.
Find related papers by JEL classification: H32 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Firm G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies L33 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Boundaries of Public and Private Enterprise; Privatization; Contracting Out
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