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Privatization discontent and its determinants: evidence from Latin America

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  • Daniele CHECCHI

    ()

  • Massimo FLORIO

    ()

  • Jorge CARRERA

    ()

Abstract

While most economists usually believe that privatization policy is socially beneficial, it faces increasing opposition in several countries. In this paper we wish to discover the ingredients in a recipe for privatization discontent. To do so we focus on Latin America, where there is wide evidence of popular opposition to privatization. We use the results of Latinobarometro (2002), a survey of a representative sample of 18501 individuals in 17 countries as our dependent variable of perception, and a privatization dataset on the same countries, including sectoral disaggregation, time profiles, proceeds, number of shares and other variables for each country. We use a set of macrovariables as controls, and test our prior beliefs on the determinants of policy failure in this area. 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, and the country suffered adverse macroeconomic shocks in a condition of high disequality of incomes. Moreover, 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 a combination of perceived distributional concerns that should be addressed by future research and policy design

Suggested Citation

  • Daniele CHECCHI & Massimo FLORIO & Jorge CARRERA, 2004. "Privatization discontent and its determinants: evidence from Latin America," Departmental Working Papers 2004-23, Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano.
  • Handle: RePEc:mil:wpdepa:2004-23
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    References listed on IDEAS

    as
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    Cited by:

    1. Martimort, David & Straub, Stéphane, 2009. "Infrastructure privatization and changes in corruption patterns: The roots of public discontent," Journal of Development Economics, Elsevier, vol. 90(1), pages 69-84, September.
    2. Veysel Avsar & Cem Karayalcin & Mehmet Ali Ulubasoglu, 2013. "State-owned Enterprises, Inequality, and Political Ideology," Economics and Politics, Wiley Blackwell, vol. 25(3), pages 387-410, November.
    3. Simona GRASSI & Riccardo PUGLISI, 2008. "Regulation and consumer satisfaction from public services: an individual fixed effects approach," Departmental Working Papers 2008-21, Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano.
    4. Senderski, Marcin, 2015. "Inhibited privatization: a hurdle race over vested interests," MPRA Paper 65482, University Library of Munich, Germany.
    5. Felipe Barrera-Osorio & Mauricio Olivera & Carlos Ospino, 2009. "Does Society Win or Lose as a Result of Privatization? The Case of Water Sector Privatization in Colombia," Economica, London School of Economics and Political Science, vol. 76(304), pages 649-674, October.
    6. Heechul Min, 2015. "Consumer benefits of reforming a state-dominated industry," Journal of Regulatory Economics, Springer, vol. 47(1), pages 58-77, February.
    7. Alvaro Forteza & Mario Tommasi, 2005. "Understanding reform in Latin America," Documentos de Trabajo (working papers) 2205, Department of Economics - dECON.
    8. Antonio Estache & L. Wren-Lewis, 2008. "Towards a Theory of Regulation for Developing Countries: Following Laffont's Lead," Working Papers ECARES 2008_018, ULB -- Universite Libre de Bruxelles.
    9. Marcin Senderski, 2015. "Inhibited privatization: a hurdle race over vested interests," European Journal of Government and Economics, Europa Grande, vol. 4(1), pages 46-66, June.
    10. Bonnet, Céline & Dubois, Pierre & Martimort, David & Straub, Stéphane, 2009. "Empirical Evidence on Satisfaction with Privatization in Latin America: Welfare Effects and Beliefs," TSE Working Papers 09-020, Toulouse School of Economics (TSE).
    11. Gelsomina Catalano & Davide Sartori, 2013. "Infrastructure investment long term contribution: Economic development and wellbeing," Working Papers 201301, CSIL Centre for Industrial Studies.

    More about this item

    Keywords

    Privatization; Latin America; Distributive impact; Panel Survey Data; Social Attitudes;

    JEL classification:

    • H32 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Firm
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • L33 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Comparison of Public and Private Enterprise and Nonprofit Institutions; Privatization; Contracting Out

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