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Privatization Discontent and Its Determinants: Evidence from Latin America

  • Checchi, Daniele


    (University of Milan)

  • Florio, Massimo


    (University of Milan)

  • Carrera, Jorge


    (University of La Plata)

Privatization policy faces increasing popular opposition in Latin America. We test for the determinants of this discontent. We use the results of Latinobarometro (2002), a survey of a representative sample of 18522 individuals in 17 countries as our dependent variable of perception, and a privatization dataset on the same countries, including sectoral disaggregation of divestitures, time profiles, proceeds, and other variables for each country. We use as well a set of macroeconomic variables as controls.. Our main finding is that disagreement with privatization is more likely when the respondent is poor, privatization was large and quick, involved a high proportion of public services as water and electricity, the country suffered adverse macroeconomic shocks, and there is high inequality of incomes. The more the respondent is educated, the more adverse to privatization he or she is. We suggest that these results depict a broadly consistent picture of privatization discontent that points to distributional issues, probably because of tariff rebalancing not adequately addressed by policy makers and regulators, as suggested by earlier empirical papers. Further research is needed on the relationship between perceptions and actual welfare changes.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 1587.

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Length: 46 pages
Date of creation: May 2005
Date of revision:
Publication status: published in: Journal of Development Studies, 2009, 45(3), 333-350
Handle: RePEc:iza:izadps:dp1587
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  1. repec:reg:rpubli:398 is not listed on IDEAS
  2. Eduardo Lora, 2001. "Structural Reforms in Latin America: What Has Been Reformed and How to Measure It," Research Department Publications 4293, Inter-American Development Bank, Research Department.
  3. Máximo Torero, 2002. "Peruvian Privatization: Impacts On Firm Performance," Research Department Publications 3169, Inter-American Development Bank, Research Department.
  4. Alberto Chong & Florencio de, 2003. "The Truth about Privatization in Latin America," Yale School of Management Working Papers ysm436, Yale School of Management.
  5. Ronald Fischer & Rodrigo Gutiérrez & Pablo Serra, 2002. "The Effects of Privatization on Firms and on Social Welfare," Documentos de Trabajo 131, Centro de Economía Aplicada, Universidad de Chile.
  6. Máximo Torero & Alberto Pascó-Font, 2003. "The social impact of privatization and the regulation of utilities in Peru," Chapters, in: Utility Privatization and Regulation, chapter 11 Edward Elgar.
  7. Jeffry M. Netter & William L. Megginson, 2001. "From State to Market: A Survey of Empirical Studies on Privatization," Journal of Economic Literature, American Economic Association, vol. 39(2), pages 321-389, June.
  8. Carlos Pombo & Manuel Ramirez, 2002. "Privatization in Colombia: a plant performance analysis," BORRADORES DE INVESTIGACIÓN 003377, UNIVERSIDAD DEL ROSARIO.
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  10. Omar Chisari & Antonio Estache & Catherine Waddams Price, 2003. "Access by the poor in Latin America's utility reform: subsidies and service obligations," Chapters, in: Utility Privatization and Regulation, chapter 2 Edward Elgar.
  11. Catherine Waddams & Ruth Hancock, 1998. "Distributional effects of liberalising UK residential utility markets," Fiscal Studies, Institute for Fiscal Studies, vol. 19(3), pages 295-319, August.
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  13. Antonio Estache & V. Foster & Q. Wodon, 2002. "Accounting for Poverty in Infrastructure Reform: Learning from Latin America's Experience," ULB Institutional Repository 2013/44108, ULB -- Universite Libre de Bruxelles.
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  15. Massimo Florio & Rinaldo Brau, 2001. "Privatisations as price reforms: an analysis of consumers' welfare change in the U.K," Departmental Working Papers 2001-19, Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano.
  16. A. Gledson de Carvalho & Francisco Anuatti-Neto & Milton Barossi-Filho & Roberto Macedo, 2003. "Costs and Benefits of Privatization: Evidence from Brazil," Research Department Publications 3149, Inter-American Development Bank, Research Department.
  17. David McKenzie & Dilip Mookherjee, 2003. "The Distributive Impact of Privatization in Latin America: Evidence from Four Countries," ECONOMIA JOURNAL OF THE LATIN AMERICAN AND CARIBBEAN ECONOMIC ASSOCIATION, ECONOMIA JOURNAL OF THE LATIN AMERICAN AND CARIBBEAN ECONOMIC ASSOCIATION, January.
  18. Barja, Gover & Urquiola, Miguel, 2001. "Capitalization, regulation and the poor: access to basic services in Bolivia," MPRA Paper 23920, University Library of Munich, Germany, revised Jul 2001.
  19. Williamson, John, 2000. "What Should the World Bank Think about the Washington Consensus?," World Bank Research Observer, World Bank Group, vol. 15(2), pages 251-64, August.
  20. Massimo Florio, 2006. "The Great Divestiture: Evaluating the Welfare Impact of the British Privatizations, 1979-1997," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262562227, June.
  21. Estache, Antonio & Gomez-Lobo, Andres & Leipziger, Danny, 2000. "Utility privatization and the needs of the poor in Latin America - Have we learned enough to get it right?," Policy Research Working Paper Series 2407, The World Bank.
  22. Chisari, Omar & Estache, Antonio & Romero, Carlos, 1999. "Winners and Losers from Utility Privatization in Argentina. Lessons from a General Equilibrium Model," UADE Working Papers 3_1999, Instituto de Economía, Universidad Argentina de la Empresa.
  23. Trujillo, Lourdes & Martin, Noelia & Estache, Antonio & Campos, Javier, 2002. "Macroeconomics effects of private sector participation in Latin America's infrastructure," Policy Research Working Paper Series 2906, The World Bank.
  24. Guillermo Calvo & Carlos A. Végh Gramont, 1991. "Exchange-Rate-Based Stabilization under Imperfect Credibility," IMF Working Papers 91/77, International Monetary Fund.
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