Privatization And Democracy: The Effects of Regime Type in the Developing World

The Determinants of Privatization: a Comparative Analysis of Developing Countries

“…Without sufficient credibility, a government will simply find it too difficult to attract interest from buyers. Biglaiser and Danis (2002) for example, demonstrate that democratic regimes, due to the transparency of their legal institutions, durable constraints on political actors and respect for property rights, are associated with a greater propensity to privatize than their authoritarian counterparts. A well-functioning stock market, and a legal system that facilitates privatization transactions and protects the purchasers of divested state assets from future opportunistic behavior, are also necessary for the success of any privatization program (Bortolotti, Fantini and Siniscalco 2003).…”

“…A well-functioning stock market, and a legal system that facilitates privatization transactions and protects the purchasers of divested state assets from future opportunistic behavior, are also necessary for the success of any privatization program (Bortolotti, Fantini and Siniscalco 2003). In addition, healthy economic fundamentals can signal stability and sound economic governance, creating a far more hospitable investment climate (Brune and Garrett 2000;Biglaiser and Danis 2002).…”

“…16 Thirdly, we controlled for the effect of regime type. According to Biglaiser and Danis (2002), regime type is an important determinant of privatization. We added the level of democracy (POLITY) to the base specification (Marshall and Jaggers 2008).…”

“…In particular, the potential efficiency gain from privatization has received considerable attention from economists (see for example, Dewenter and Malatesta 2001). There are now a growing number of empirical studies that explore the determinants of privatization across countries and across time (see Boix 1997;Brune and Garrett 2000;Biglaiser and Danis 2002;Bortolotti, Fantini and Siniscalco 2003;Brune, Garrett and Kogut 2004;Meseguer 2004;Henisz, Zellner and Guille´n 2005;Schneider, Fink and Tenbu¨cken 2005;Murillo and Martı´nez-Gallardo 2007;Zohlnho¨fer, Obinger and Wolf 2008;Doyle 2010;Bjørnskov and Potrafke 2011). The majority of these studies, however, focus exclusively on the advanced industrialized nations and many of them have been hampered by methodological limitations coupled with the lack of reliable, comparable and temporal data on privatization.…”

Privatization and Nationalization Cycles

“…Our discussion assigns no direct role to other political characteristics, such as ideological preferences or political regime, which are sometimes stressed in the literature. The conventional wisdom (for instance, Biglaiser and Danis, 2002;Jensen, 2008;Li, 2009;and Mahdavi, 2014) is that democratic regimes are more likely to privatize and autocratic regimes are more prone to nationalize .…”