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The Privatization Origins of Political Corporations

Author

Listed:
  • Felipe Gonz√°lez
  • Mounu Prem
  • Francisco UrzÔøΩa I

Abstract

We show how the sale of state owned firms in dictatorships may lead to the creation of political corporations operating in democracies. Using several novel datasets, we characterize the privatizations of the Pinochet regime in Chile using a data driven algorithm, confirming that some state owned firms were sold underpriced to politically connected individuals. We then show how firms with crooked privatization processes grew and benefited from Pinochet and in democracy formed political connections, financed political campaigns, and were more likely to appear in the Panama Papers. These results reveal how authoritarian regimes can influence a subsequent democracy and document a way in which political corporations are created.

Suggested Citation

  • Felipe Gonz√°lez & Mounu Prem & Francisco UrzÔøΩa I, 2018. "The Privatization Origins of Political Corporations," Documentos de Trabajo 16357, Universidad del Rosario.
    • Handle: RePEc:col:000092:016357
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    Cited by:

    1. González, Felipe & Prem, Mounu, 2018. "The value of political capital: Dictatorship collaborators as business elites," Journal of Economic Behavior & Organization, Elsevier, vol. 155(C), pages 217-230.
    2. F Aldunate & F GonzÔøΩlez & M Prem & F UrzÔøΩa, 2019. "The Evolution of Ownership Structures: Privatization, Business Groups, and Pyramids," Documentos de Trabajo 17348, Universidad del Rosario.
    3. González, Felipe & Muñoz, Pablo & Prem, Mounu, 2021. "Lost in transition? The persistence of dictatorship mayors," Journal of Development Economics, Elsevier, vol. 151(C).

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