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When the State Takes Over: Nationalization and Firm Performance

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  • Gonzalez, Felipe
  • Prem, Mounu

Abstract

We study a large nationalization program using newly assembled firm data from Chile under Salvador Allende (1970–73). Difference-in-differences estimates show that firms targeted by the program experienced a substantial decline in profitability relative to firms that remained private. Return on assets fell sharply, and targeted firms became less likely to report importing activity. These patterns were concentrated in manufacturing, while firms in strategic and natural-resource activities followed more muted trajectories. We also find suggestive evidence of lower electoral support for the incumbent coalition in more exposed municipalities

Suggested Citation

  • Gonzalez, Felipe & Prem, Mounu, 2026. "When the State Takes Over: Nationalization and Firm Performance," CEPR Discussion Papers 21353, Centre for Economic Policy Research.
    • Handle: RePEc:cpr:ceprdp:21353
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    Keywords

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    JEL classification:

    • L33 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Comparison of Public and Private Enterprise and Nonprofit Institutions; Privatization; Contracting Out
    • N36 - Economic History - - Labor and Consumers, Demography, Education, Health, Welfare, Income, Wealth, Religion, and Philanthropy - - - Latin America; Caribbean
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior

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