Move to markets? An empirical analysis of privatization in developing countries
Aspects of the privatization experience are analysed for a group of 35 low or middle-income developing countries, over the period 1982 through 1999. The theory turns on net political benefits, which in our model are the primary determinant of privatization policies. The decision to privatize is captured here in three related, but distinct, dependent variables: (i) timing; (ii) pace; and (iii) intensity. Our notion of the independent variable, 'net political benefits', is not measured directly, but is instead proxied by an array of macroeconomic, political, and institutional variables. Our key finding is that, though political benefits turn out to explain the timing, pace, and intensity of privatization, the effects are very different in each case. The timing hypothesis is tested using a Cox proportional hazard model, the pace hypothesis is tested using a random effects negative binomial model and the intensity hypothesis is tested using the random effects model. We find that the factors that improve timing delay intensity-early adopters are later implementers. Furthermore, we find that a privatization policy is much more likely to be a crisis-driven, last ditch effort to turn the economy around, rather than a carefully chosen policy with explicit, long-term goals. A related, and very important, finding in our analysis has to do with the 'lock-in' of institutions. The particular form of political institutions, foreign aid regimes, and level of development of property rights systems in the nation have significant conditioning influences on the extent of lock-in. These relationships may be important for informing policy decisions, and for understanding apparent 'failures' of privatization policies. Copyright © 2004 John Wiley & Sons, Ltd.
Volume (Year): 16 (2004)
Issue (Month): 2 ()
|Contact details of provider:|| Web page: http://www3.interscience.wiley.com/journal/5102/home|
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Deininger, K & Squire, L, 1996. "Measuring Income Inequality : A New Data-Base," Papers 537, Harvard - Institute for International Development.
- Dani Rodrik, 2000.
"Institutions for High-Quality Growth: What They are and How to Acquire Them,"
NBER Working Papers
7540, National Bureau of Economic Research, Inc.
- Dani Rodrik, 2006. "Institutions for High-Quality Growth: What They Are and How to Acquire Them," Chapters, in: Institutions, Globalisation and Empowerment, chapter 2 Edward Elgar Publishing.
- Rodrik, Dani, 2000. "Institutions For High-Quality Growth: What They Are And How To Acquire Them," CEPR Discussion Papers 2370, C.E.P.R. Discussion Papers.
- Cukierman, A. & Liviatan, N., 1991.
"The Dynamics of Optimal Gradual Stabilizations,"
34-91, Tel Aviv.
- Alesina, Alberto & Drazen, Allan, 1991.
"Why Are Stabilizations Delayed?,"
American Economic Review,
American Economic Association, vol. 81(5), pages 1170-1188, December.
- Anders Åslund & Peter Boone & Simon Johnson, 1996. "How to Stabilize: Lessons from Post -communist Countries," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 27(1), pages 217-314.
- Mariano Tommasi & Andres Velasco, 1996.
"Where are we in the political economy of reform?,"
Journal of Economic Policy Reform,
Taylor & Francis Journals, vol. 1(2), pages 187-238.
- Mariano Tommasi, 1995. "Where are we in the Political Economy of Reform?," UCLA Economics Working Papers 733, UCLA Department of Economics.
- Mariano Tommasi & Andres Velasco, 1995. "Where Are We in the Political Economy of Reform?," Working Papers 11, Universidad de San Andres, Departamento de Economia, revised Apr 1996.
- Tommasi, Mariano & Velasco, Andres, 1995. "Where are we in the Political Economy of Reform?," Working Papers 95-20, C.V. Starr Center for Applied Economics, New York University.
- Andrew Berg & Jeffrey Sachs, 1988.
"The Debt Crisis: Structural Explanations of Country Performance,"
NBER Working Papers
2607, National Bureau of Economic Research, Inc.
- Berg, Andrew & Sachs, Jeffrey, 1988. "The debt crisis structural explanations of country performance," Journal of Development Economics, Elsevier, vol. 29(3), pages 271-306, November.
- Dethier, Jean-Jacques*Ghanem, Hafez*Zoli, Edda, 1999. "Does democracy facilitate the economic transition : an empirical study of Central and Eastern Europe and the Former Soviet Union," Policy Research Working Paper Series 2194, The World Bank.
- Ross Levine, 1997.
"Financial Development and Economic Growth: Views and Agenda,"
Journal of Economic Literature,
American Economic Association, vol. 35(2), pages 688-726, June.
- Levine, Ross, 1996. "Financial development and economic growth : views and agenda," Policy Research Working Paper Series 1678, The World Bank.
- Dewatripont, M & Roland, G, 1992.
"The Virtues of Gradualism and Legitimacy in the Transition to a Market Economy,"
Royal Economic Society, vol. 102(411), pages 291-300, March.
- Mathias Dewatripont & Gérard Roland, 1992. "The virtues of gradualism and legitimacy in the transition to a market economy," ULB Institutional Repository 2013/9587, ULB -- Universite Libre de Bruxelles.
- Dewatripont, Mathias & Roland, Gérard, 1991. "The Virtues of Gradualism and Legitimacy in the Transition to a Market Economy," CEPR Discussion Papers 538, C.E.P.R. Discussion Papers.
- Robert E. Hall & Charles I. Jones, 1999. "Why do Some Countries Produce So Much More Output Per Worker than Others?," The Quarterly Journal of Economics, Oxford University Press, vol. 114(1), pages 83-116.
- Beck, Thorsten & Clarke, George & Groff, Alberto & Keefer, Philip & Walsh, Patrick, 2000. "New tools and new tests in comparative political economy - the database of political institutions," Policy Research Working Paper Series 2283, The World Bank.
- Demirguc-Kunt, Asli & Levine, Ross & DEC, 1994. "The financial system and public enterprise reform : concepts and cases," Policy Research Working Paper Series 1319, The World Bank.
- Andrei Shleifer & Robert W. Vishny, 1994. "Politicians and Firms," The Quarterly Journal of Economics, Oxford University Press, vol. 109(4), pages 995-1025.
- Stephen Knack & Philip Keefer, 1995. "Institutions And Economic Performance: Cross-Country Tests Using Alternative Institutional Measures," Economics and Politics, Wiley Blackwell, vol. 7(3), pages 207-227, November.
- Robert E. Hall & Charles I. Jones, 1999. "Why Do Some Countries Produce So Much More Output per Worker than Others?," NBER Working Papers 6564, National Bureau of Economic Research, Inc.
- Nellis, J., 1999. "Time to Rethink Privatization in Transition Economies?," Papers 38, World Bank - International Finance Corporation.
- Allan Drazen & Vittorio Grilli, 1990.
"The Benefits of Crises for Economic Reforms,"
NBER Working Papers
3527, National Bureau of Economic Research, Inc.
- Scully, Gerald W, 1988. "The Institutional Framework and Economic Development," Journal of Political Economy, University of Chicago Press, vol. 96(3), pages 652-662, June.
- Adam Przeworski & Fernando Limongi, 1993. "Political Regimes and Economic Growth," Journal of Economic Perspectives, American Economic Association, vol. 7(3), pages 51-69, Summer.
- Casella, Alessandra & Eichengreen, Barry, 1996.
"Can Foreign Aid Accelerate Stabilisation?,"
Royal Economic Society, vol. 106(436), pages 605-619, May.
- Alessandra Casella & Barry Eichengreen, 1994. "Can Foreign Aid Accelerate Stabilization?," NBER Working Papers 4694, National Bureau of Economic Research, Inc.
- Casella, Alessandra & Eichengreen, Barry, 1994. "Can Foreign Aid Accelerate Stabilization?," CEPR Discussion Papers 961, C.E.P.R. Discussion Papers.
- Knack, Stephen, 2000. "Aid dependence and the quality of governance : a cross-country empirical analysis," Policy Research Working Paper Series 2396, The World Bank.
- Jonathan Isham & Daniel Kaufmann, 1999. "The Forgotten Rationale for Policy Reform: The Productivity of Investment Projects," The Quarterly Journal of Economics, Oxford University Press, vol. 114(1), pages 149-184.
- Paolo Mauro, 1995. "Corruption and Growth," The Quarterly Journal of Economics, Oxford University Press, vol. 110(3), pages 681-712.
- Roubini, Nouriel & Sachs, Jeffrey D., 1989. "Political and economic determinants of budget deficits in the industrial democracies," European Economic Review, Elsevier, vol. 33(5), pages 903-933, May.
- Beck, Thorsten & Demirguc-Kunt, Asli & Levine, Ross, 1999. "A new database on financial development and structure," Policy Research Working Paper Series 2146, The World Bank.
- Isham, Jonathan & Kaufmann, Daniel & Pritchett, Lant, 1995. "Governance and returns on investment : an empirical investigation," Policy Research Working Paper Series 1550, The World Bank.
When requesting a correction, please mention this item's handle: RePEc:wly:jintdv:v:16:y:2004:i:2:p:213-240. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Wiley-Blackwell Digital Licensing)or (Christopher F. Baum)
If references are entirely missing, you can add them using this form.