The Determinants of Privatization


in The Challenges of Privatization

Published in print March 2004 | ISBN: 9780199249343
Published online April 2004 | e-ISBN: 9780191600845 | DOI:
 The Determinants of Privatization

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This chapter studies the economic, political, and institutional determinants of privatization. The analysis begins with a discussion of the link between privatization and economic development, then it studies the role of government’s budget constraints, showing how public finance conditions may bear on the decision to privatize. The chapter then focuses on the role of financial markets and governments’ political orientation in triggering divestiture. Finally, it takes into account institutional aspects, such as a country’s legal tradition, and political regimes. The various hypotheses are discussed sequentially. Their empirical validity, however, is assessed through an original panel data econometric analysis.

Keywords: economic development; financial markets; legal origins; partisan politics; political institutions; public finance; size of SOE sector

Chapter.  7790 words. 

Subjects: Financial Markets

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