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Privatization and Nationalization Cycles

Listed author(s):
  • Roberto Chang

    (Rutgers University and NBER)

  • Constantino Hevia

    (Universidad di Tella)

  • Norman Loayza

    (World Bank)

This paper studies the cycles of nationalization and privatization in resource-rich economies. It starts with a discussion of available evidence on the drivers and consequences of privatization and nationalization. Then it develops a static and dynamic model of the choice between private and national regimes for the ownership of natural resources. In the model, the choice is driven by a basic equality-efficiency tradeoff: national ownership results in more redistribution of income and more equality but undermines incentives for effort. The resolution of the tradeoff depends on external and domestic conditions that affect social welfare under each regime. We characterize how external variables –such as the commodity price– and domestic ones –such as the tax system– affect the choice of private vs. national regimes. Our analysis therefore identifies the determinants of the observed cycles of privatization and nationalization and is consistent with key stylized facts.

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Paper provided by Peruvian Economic Association in its series Working Papers with number 2015-47.

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Date of creation: Jun 2015
Handle: RePEc:apc:wpaper:2015-047
Contact details of provider: Web page: http://perueconomics.org/

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  9. Osmel Manzano & Francisco Monaldi, 2008. "The Political Economy of Oil Production in Latin America," ECONOMIA JOURNAL OF THE LATIN AMERICAN AND CARIBBEAN ECONOMIC ASSOCIATION, ECONOMIA JOURNAL OF THE LATIN AMERICAN AND CARIBBEAN ECONOMIC ASSOCIATION, vol. 0(Fall 2008), pages 59-103, August.
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  26. repec:idb:brikps:59618 is not listed on IDEAS
  27. Atkinson, Giles & Hamilton, Kirk, 2003. "Savings, Growth and the Resource Curse Hypothesis," World Development, Elsevier, vol. 31(11), pages 1793-1807, November.
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