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Privatization and Nationalization Cycles

Author

Listed:
  • Roberto Chang

    (Rutgers University and NBER)

  • Constantino Hevia

    (Universidad di Tella)

  • Norman Loayza

    (World Bank)

Abstract

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.

Suggested Citation

  • Roberto Chang & Constantino Hevia & Norman Loayza, 2015. "Privatization and Nationalization Cycles," Working Papers 2015-47, Peruvian Economic Association.
  • Handle: RePEc:apc:wpaper:2015-047
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Hajzler, Christopher, 2014. "Resource-based FDI and expropriation in developing economies," Journal of International Economics, Elsevier, vol. 92(1), pages 124-146.
    2. repec:eee:jrpoli:v:53:y:2017:i:c:p:247-258 is not listed on IDEAS
    3. Das, Amarendra, 2012. "Who extracts minerals more efficiently—Public or private firms? A study of Indian mining industry," Journal of Policy Modeling, Elsevier, vol. 34(5), pages 755-766.
    4. Polterovich, Victor, 2013. "Приватизация И Рациональная Структура Собственности. Часть 2. Рационализация Структуры Собственности
      [Privatization and the rational ownership structure. Part 2: rationalization of the ownership st
      ," MPRA Paper 64374, University Library of Munich, Germany.
    5. Stan du Plessis, 2011. "Nationalising South African mines: Back to a prosperous future, or down a rabbit hole?," Working Papers 17/2011, Stellenbosch University, Department of Economics.
    6. Voszka, Éva, 2013. "Államosítás, privatizáció, államosítás
      [Nationalization, privatization, nationalization]
      ," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(12), pages 1289-1317.
    7. Niko Jaakkola & Daniel Spiro, 2016. "Finders, Keepers?," Working Papers id:11118, eSocialSciences.
    8. Polterovich, Victor, 2012. "Приватизация и рациональная структура собственности (Privatizatsiya i ratsional’naya struktura sobstvennosti)
      [Privatization and the Rational Ownership Structure]
      ," MPRA Paper 41069, University Library of Munich, Germany.
    9. Mahdavi, Paasha, 2014. "Why do leaders nationalize the oil industry? The politics of resource expropriation," Energy Policy, Elsevier, vol. 75(C), pages 228-243.
    10. Eden, Maya & Kraay, Aart & Qian, Rong, 2012. "Sovereign defaults and expropriations : empirical regularities," Policy Research Working Paper Series 6218, The World Bank.
    11. Polterovich (Полтерович), Victor (Виктор), 2013. "Приватизация И Рациональная Структура Собственности. Часть 2. Рационализация Структуры Собственности
      [Privatization and the rational ownership structure. Part 2: rationalization of the ownership st
      ," MPRA Paper 64168, University Library of Munich, Germany.
    12. Cakir Melek, Nida, 2014. "Productivity, nationalization, and the role of "news": lessons from the 1970s," Research Working Paper RWP 14-6, Federal Reserve Bank of Kansas City.
    13. Christopher Hajzler & Jonathan Rosborough, 2016. "Government Corruption and Foreign Direct Investment Under the Threat of Expropriation," Staff Working Papers 16-13, Bank of Canada.

    More about this item

    Keywords

    Privatization; Nationalization; Institutions; Natural Resources; Oil;

    JEL classification:

    • F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development

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