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The First Privatization Policy In A Democracy: Selling State-Owned Enterprises In 1948-1950 Puerto Rico

Author

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  • Germà Bel

    () (Faculty of Economics, University of Barcelona)

Abstract

In the 1940s, when the Governor of Puerto Rico was appointed by the US President and the Puerto Rican government was answerable only to the US Federal government, a large state-owned enterprise (SOE) sector was established on the island. Public services such as water, transportation and energy were nationalized, and several new manufacturing SOEs were created to produce cement, glass, shoes, paper and chalkboard, and clay products. These enterprises were created and managed by government-owned corporations. Later on, between 1948 and 1950, under the island’s first elected Governor, the government sold these SOEs to private groups. This paper documents both the creation and the privatization of the SOE sector in Puerto Rico, and analyzes the role played by ideology, political interests, and economic concerns in the decision to privatize them. Whereas ideological factors might have played a significant role in the building of the SOE sector, we find that privatization was driven basically by economic factors, such as the superior efficiency of private firms in the sectors where the SOEs operated, and by the desire to attract private industrial investment to the Puerto Rican economy.

Suggested Citation

  • Germà Bel, 2009. "The First Privatization Policy In A Democracy: Selling State-Owned Enterprises In 1948-1950 Puerto Rico," IREA Working Papers 200915, University of Barcelona, Research Institute of Applied Economics, revised Jun 2009.
  • Handle: RePEc:ira:wpaper:200915
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    File URL: http://www.ub.edu/irea/working_papers/2009/200915.pdf
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    Cited by:

    1. Benjamin Bridgman & Michael Maio & James A. Schmitz, 2012. "What ever happened to the Puerto Rican sugar manufacturing industry?," Staff Report 477, Federal Reserve Bank of Minneapolis.

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    Keywords

    Public enterprise; Privatization; Industrial policy; Puerto Rico.;

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